Federal 

Maritime 

Commission

Performance and 

Accountability Report

Fiscal Year 2015

 Chairman Mario Cordero

 November 2015
i

Introduction

This Performance and Accountability Report (Report or PAR) represents the completion of the 

Federal Maritime Commission’s (FMC or Commission) program and financial management process 

for fiscal year (FY) 2015, which began with mission and program planning, continued with the 

formulation and justification of FMC’s budget submission to the President and Congress, through 

budget execution, and ended with a report of our program performance and the use of resources. This 

report covers the Commission’s activities and accomplishments from October 1, 2014, through 

September 30, 2015 (FY 2015).

ABOUT THIS REPORT

This Performance and Accountability Report is a year-end progress report, where the FMC reviews 

its strategic goals, objectives, and performance measures and provides program and financial 

information which enables the President, Congress, and the public to assess the performance of the 

agency relative to its mission and the resources entrusted to it. This PAR satisfies the following 

legislation:

• The Federal Manager’s Financial Integrity Act of 1982 requires continuous evaluations and 

reporting of the adequacy of the 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 the use of 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 in order 

to provide performance, financial, and other related information in a more useful manner. 

• The Inspector General Reform Act of 2008 amends the Inspector General Act of 1978 to enhance 

the independence of the 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. 

This Report can be downloaded at http://www.fmc.gov/about/performance_and_accountability_reports.aspx. 
ii

The FMC-at-a-Glance

Laws Enforced

In 1961, the Federal Maritime Commission was established by an executive order (titled 

Reorganization Plan No. 7). The Commission was charged with regulating U.S. foreign ocean 

commerce. The FMC administers the Shipping Act of 1984 (1984 Act, Shipping Act) as amended by 

the Ocean Shipping Reform Act of 1998 (OSRA); § 19 of the Merchant Marine Act, 1920 (1920 Act); 

the Foreign Shipping Practices Act of 1988 (FSPA); and §§ 2 and 3 of P.L. 89-777 (46 U.S.C. §§ 44102 

and 44103).

Profile

• The FMC is headquartered in Washington, D.C. and has nine Area Representatives in key U.S. 

maritime port locations. 

• The Commission had 121 full-time equivalent employees onboard at the end of FY 2015

(September 30, 2015).

• The FMC’s total budget authority for FY 2015 was $25.66 million. 

HOW THIS REPORT IS ORGANIZED

This report includes four major sections. 

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

results, a high-level discussion of program performance, management assurances on internal controls

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

issues. 

Program Performance Information provides data on the Commission’s progress toward meeting its strategic 

goals and targets during fiscal year 2015. 

Financial Information provides financial details including a message from the Chief Financial Officer, 

the independent auditor’s report, and the audited financial statements. 

Other Information includes a statement prepared by the Inspector General (IG) 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.
iii

Table of Contents

Introduction .................................................................................................................................. i

The FMC-at-a-Glance .................................................................................................................ii

Message from the Chairman ...................................................................................................... iv

MANAGEMENT’S DISCUSSION and ANALYSIS 1

Mission and Organization ........................................................................................................... 2

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

Agency Mission Challenges........................................................................................................ 8

Program Performance Overview............................................................................................... 10

Financial Performance Overview.............................................................................................. 14

Financial Statement Highlights................................................................................................. 17

Controls, Systems, and Legal Compliance................................................................................ 20

Chairman’s FMFIA Statement of Assurance ............................................................................ 24

PROGRAM PERFORMANCE INFORMATION 25

Annual Performance Report...................................................................................................... 26

FINANCIAL INFORMATION 31

Message from the Chief Financial Officer................................................................................ 32

Principal Financial Statements.................................................................................................. 33

Independent Auditors' Report.................................................................................................... 36

OTHER INFORMATION 80

Comments on IG-Identified Management and Performance Challenges.................................. 87

Improper Payments Information Act......................................................................................... 89

Summary of Financial Statement Audit.................................................................................... 89
iv

Message from the Chairman

I am pleased to provide you the Federal Maritime Commission’s

Performance and Accountability Report for fiscal year 2015. During 

the past year, the FMC has tirelessly carried out the Commission’s 

mission to foster an equitable, secure, and reliable ocean transportation 

system for the American people. This report illustrates how the FMC 

exemplifies good government by properly managing limited resources, 

providing an analysis of program performance and financial activities, 

and addressing the Commission’s plan to meet the challenges ahead.

The Commission is charged by Congress to enforce the ocean liner 

shipping laws of the United States. The FMC regulates virtually all 

entities involved in liner shipping, receiving, handling, and transporting 

cargo and passengers in foreign commerce. A fair, efficient, and adequate ocean transportation system 

depends on the FMC’s ability to evaluate carrier and terminal agreements for anti-competitive impact 

and to license ocean transportation intermediaries to protect the shipping public and facilitate 

international trade. 

In fiscal year 2015, the Commission continued to serve a paramount role in U.S. commerce – ensuring 

competition and reliable service to U.S. exporters and importers. The aforementioned role will 

continue in order to positively impact the nation’s oceanborne transportation system in the coming 

years. The work of the Commission supports U.S. exports, the economic recovery, and job growth. 

Congestion at U.S. ports is an ongoing concern that threatens both economic and job growth, and is 

a top priority for the Commission. In 2015, the FMC issued key reports on port congestion and 

related demurrage and detention issues, and continues to work with industry to facilitate not only 

solutions to congestion, but in addition, avoiding congestion in the supply chain. Ultimately, the 

negative impacts of congestion affect the American shipper’s bottom line.

The Commission regulates U.S. oceanborne foreign commerce valued at $984.2 billion and accounting 

for 31.4 million twenty-foot equivalent units (TEUs) of containerized import and export cargo. The 

Commission is focused on supporting U.S. exports and the country’s continued economic growth. 

The FMC’s mission directly supports the President’s commitment to economic growth and job 

creation. Commission programs related to monitoring international oceanborne trade conditions 

advance the President’s National Export Initiative by promoting access to foreign markets for 

American exports and efficient supply chains for the importation of goods for domestic production 

and consumption. The Commission will continue to play an integral role in implementing a regulatory 

system that ensures a competitive playing field, facilitates commerce, and encourages reliable service 

to U.S. exporters and importers, while minimizing government intervention and costs. 

The FMC’s Strategic Plan for 2014-2018 embraces our statutory mandate and agency objectives 

referenced above. Fiscal year 2015 was the 7th year in which there has been a quantitative measurement 

of performance goals, which employs measures and targets. The Commission’s actual performance 

is compared with the targeted levels of performance established in the Strategic Plan. For the 12th

straight year, the FMC received an unmodified (“clean”) opinion on its financial statements.
v

As outlined in the Management Assurances section (see page 24), the Commission has completed 

evaluations of its assessment of its internal controls over operations, systems, and financial reporting. 

The referenced evaluations and reports confirm that the FMC has no material weaknesses, significant 

deficiencies, or instances of non-compliance with laws and regulations to report. The performance

data described in this PAR was compiled and evaluated using the techniques described in this report 

for achieving the required level of credibility for the verification and validation of performance data 

relative to its intended use, and I have no reason to doubt the completeness or reliability of our 

performance data. Additionally, the financial and performance data presented in this report are 

complete, reliable, and accurate in keeping with the guidance from the Office of Management and 

Budget.

I take great pride in the performance and dedication of Commission employees and my fellow 

Commissioners in achieving our mission. In every bureau and office of the Commission, our 

professionals exhibit hard work, cooperation, and dedication to advance the Commission’s mission.

All of us at the FMC look forward to continuing our work to foster an equitable, secure, and reliable 

ocean transportation system that protects American shippers. 

Sincerely,

/s/

Mario Cordero

Chairman

November 16, 2015
MANAGEMENT’S DISCUSSION

and ANALYSIS

Fiscal Year 2015
Management’s Discussion and Analysis

2

Mission and Organization

The FMC: Our Purpose and History

In 1961, the Kennedy Administration and Congress decided that regulating the activities of 

international liner shipping companies and promoting a healthy U.S. merchant marine should be 

pursued by separate agencies. By executive order (titled Reorganization Plan No. 7), two agencies were 

established: the Federal Maritime Commission and the Maritime Administration (MARAD). The 

Commission was charged with regulating U.S. foreign ocean commerce, and MARAD was formed to 

promote America’s merchant marine. Since that time, the FMC has worked to ensure that neither the 

activities of liner shipping groups nor foreign government laws or regulations could impose unfair 

costs on American exports, or on American consumers of imported goods. 

The FMC administers the Shipping Act of 1984 (1984 Act, 

Shipping Act) as amended by the Ocean Shipping Reform 

Act of 1998 (OSRA); § 19 of the Merchant Marine Act, 1920 

(1920 Act); the Foreign Shipping Practices Act of 1988 

(FSPA); and §§ 2 and 3 of P.L. 89-777 (46 U.S.C. §§ 44102 

and 44103).

The Commission has been charged by Congress with many 

responsibilities, including: (1) monitoring activities of ocean 

common carriers, marine terminal operators (MTOs), ports, 

and ocean transportation intermediaries (OTIs) that operate 

in the U.S. foreign commerce to ensure just and reasonable 

practices; (2) reviewing competitive activities, such as rate 

discussion agreements, carrier alliances, and other 

agreements among common carriers and/or MTOs; (3) 

licensing qualified OTIs in the U.S., and ensuring that all 

OTIs (including foreign OTIs) operating in U.S. trades are 

bonded or maintain other evidence of financial responsibility; (4) maintaining trade monitoring, 

enforcement and dispute resolution programs to assist regulated entities in achieving compliance, and 

to detect and remedy malpractices and violations of the prohibited acts set forth in § 10 of the 1984 

Act; (5) providing dispute resolution services to the industry and consumers; (6) monitoring the laws 

and practices of foreign governments for discriminatory or otherwise adverse impact on shipping 

conditions in U.S. trades, and imposing appropriate remedial action pursuant to § 19 of the 1920 Act 

or FSPA; (7) enforcing special regulatory requirements applicable to carriers owned or controlled by 

foreign governments; (8) ensuring that passenger vessel operators (PVO) demonstrate adequate 

financial responsibility to indemnify passengers in the event of non-performance of voyages or 

passenger injury or death pursuant to 46 U.S.C. §§ 44102 and 44103; (9) processing and reviewing 

agreements, service contracts, and service arrangements pursuant to the 1984 Act for compliance with 

statutory requirements; and (10) reviewing common carriers’ privately published tariff systems for 

accessibility, accuracy, and reasonable terms.

Our Mission

To foster a fair, efficient, and 

reliable international ocean 

transportation system and to 

protect the public from unfair 

and deceptive practices.

Our Vision

Fairness and Efficiency in the 

U.S. Maritime Commerce
Management’s Discussion and Analysis

3

Our Organization 

MEMBERS OF THE COMMISSION

Mario Cordero 

Chairman

Rebecca F. Dye 

Commissioner 

Richard A. Lidinsky, Jr. 

Commissioner

Michael A. Khouri 

Commissioner

William P. Doyle 

Commissioner
Management’s Discussion and Analysis

4

The FMC is directed 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. The President designates one commissioner to serve as Chairman. The 

post is currently held by Chairman Mario Cordero, a commissioner since 2011, who was designated

Chairman on April 1, 2013. The Chairman serves as the Chief Executive and Administrative Officer 

of the Commission. 

The FMC maintains a small workforce of highly experienced economists, attorneys, and experts in 

ocean transportation and government administration. The specific roles and responsibilities of each 

office within the Commission can be found at http://www.fmc.gov/about/orgchart.aspx. The 

FMC’s organizational units consist of: 

Offices of the Commissioners Office of the Inspector 

General (OIG)

Office of the Secretary (OS)

Office of the Administrative 

Law Judges (OALJ)

Office of Consumer Affairs 

and Dispute Resolution 

Services (CADRS)

Office of the General Counsel 

(OGC)

Office of the Managing 

Director (OMD)

Bureau of Certification and 

Licensing (BCL)

Bureau of Enforcement (BOE)

Bureau of Trade Analysis 

(BTA)

Area Representatives (ARs) Office of Equal Employment 

Opportunity (EEO)

Office of Budget and Finance 

(OBF)

Office of Human Resources 

(OHR)

Office of Information 

Technology

(OIT)

Office of Management 

Services (OMS)

The majority of FMC personnel are located in Washington, D.C., with additional personnel stationed 

in major U.S. seaport locations in Houston, Los Angeles, New Orleans, New York/New Jersey, 

Seattle/Tacoma, and South Florida.
Management’s Discussion and Analysis

5

COMMISSIONER 

DYE

COMMISSIONER 

LIDINSKY

COMMISSIONER 

DOYLE

CHAIRMAN 

CORDERO

Office of the 

Inspector 

General

Office of Equal 

Employment 

Opportunity

Office of the 

Managing 

Director

COMMISSIONER 

KHOURI

Office of 

the General 

Counsel

Office of 

the 

Secretary

Office of 

Administrative 

Law Judges

Office of 

Consumer Affairs 

and Dispute 

Resolution 

Office of 

Budget and 

Finance

Office of 

Human 

Resources

Office of 

Management 

Services

Office of 

Information 

Technology

Bureau of 

Certification

and 

Licensing

Bureau of 

Enforcement

Bureau of 

Trade 

Analysis

Area Representatives 

Houston 

Los Angeles 

New Orleans 

New York/New Jersey 

Seattle/Tacoma 

South Florida

FEDERAL MARITIME COMMISSION 

ORGANIZATION CHART 

as of 

SEPTEMBER 30, 2015

Administrative 

Technical Direction
Management’s Discussion and Analysis

6

Regulatory Responsibility and Oversight

The FMC meets its primary regulatory responsibilities and ensures the integrity of the U.S. ocean 

transportation system by: 

• licensing qualified OTIs in the U.S.,

and ensuring that all OTIs (including 

foreign OTIs) are bonded or maintain 

other evidence of financial 

responsibility;

• processing and reviewing agreements, 

service contracts, and service 

arrangements pursuant to the 1984 Act 

for compliance with statutory 

requirements; and reviewing common 

carriers’ privately published tariff 

systems for accessibility, accuracy, and 

reasonable terms;

• monitoring the activities of ocean 

common carriers, MTOs, ports, and 

OTIs operating in the U.S. foreign 

commerce to ensure just and 

reasonable practices;

• reviewing competitive activities of rate 

discussion agreements, carrier alliances, 

and other agreements among common 

carriers and/or MTOs;

• providing dispute resolution services to 

the industry and consumers;

• maintaining trade monitoring, 

enforcement, and dispute resolution 

programs to assist regulated entities in 

achieving compliance, and to detect 

and remedy malpractice and violations 

of § 10 of the 1984 Act;

• monitoring the laws and practices of 

foreign governments for any 

discriminatory or otherwise adverse 

impact on shipping conditions in U.S. 

trades, and imposing appropriate 

remedial action pursuant to § 19 of 

the 1920 Act or FSPA;

• enforcing special regulatory 

requirements applicable to carriers 

owned or controlled by foreign 

governments; and 

• ensuring that PVOs demonstrate 

adequate financial responsibility to 

indemnify passengers in the event of 

nonperformance of voyages or 

passenger injury or death pursuant to 

46 U.S.C. §§ 44102 and 44103.

The Commission administers the Shipping Act of 1984 (1984 Act) as amended by the Ocean Shipping 

Reform Act of 1998 (OSRA); § 19 of the Merchant Marine Act, 1920 (1920 Act); the Foreign Shipping 

Practices Act of 1988 (FSPA); and §§ 2 and 3 of Public Law (P.L.) 89-777 (46 U.S.C. §§ 44102 and 

44103). The FMC is authorized by the FSPA, the 1920 Act, and 1984 Act as amended by OSRA to 

take action to ensure that the foreign commerce of the U.S. is not burdened by non-market barriers 

to ocean shipping. The FMC may take countervailing action to correct unfavorable shipping 

conditions in U.S. foreign commerce and may impose penalties. The FMC may address actions by 

carriers or foreign governments that adversely affect shipping in the U.S. foreign oceanborne trades 

including the intermodal operations of carriers or the operations of OTIs, or that impair access of 

U.S.-flag vessels to ocean trade between foreign ports.

The 1984 Act is applicable to the operations of common carriers and other persons engaged in U.S. 

foreign commerce. It exempts agreements that have become effective under the 1984 Act from the 
Management’s Discussion and Analysis

7

U.S. antitrust laws. The FMC reviews and evaluates agreements to ensure that they do not exploit the 

grant of antitrust immunity, and to ensure that agreements do not otherwise violate the 1984 Act, or 

result in an unreasonable increase in transportation cost or unreasonable reduction in service.

In addition to monitoring relationships among carriers, the FMC is responsible for ensuring that 

individual carriers, as well as those permitted by agreement to act in concert, fairly treat shippers and 

other members of the shipping public in accordance with the 1984 Act’s prohibition against undue 

discrimination. The 1984 Act requires all carriers to make their rates, charges, and practices available 

in automated tariff systems available electronically to the public. Non-vessel-operating common 

carriers (NVOCCs) may assess the rates and charges published in their tariffs, or may offer service 

arrangements or negotiated rate agreements with shipping customers. Ocean common carriers are 

permitted to enter into service contracts with their shipper customers. Such contracts are filed 

electronically with the FMC in an Internet-based system, and are provided confidential treatment by 

the FMC as required by the 1984 Act. The FMC does not have the authority to approve or disapprove 

general rate increases (GRIs) or individual commodity rate levels in the U.S. foreign commerce, except 

with regard to certain foreign government-owned or controlled carriers.

Sections 2 and 3 of P.L. 89-777 require the operators of passenger vessels with 50 or more berths who 

embark passengers at U.S. ports to establish financial coverage to indemnify passengers in cases of 

death, injury, or nonperformance of transportation. The FMC certifies such operators upon the 

submission of satisfactory evidence of financial responsibility. 

The FMC oversees more than 6,600 regulated entities (PVOs, vessel-operating common carriers 

(VOCCs), MTOs, conferences, OTIs, etc.). The agency ensures that all OTIs operating in the foreign 

commerce of the U.S. have established the required financial responsibility to protect shippers from 

financial loss, and additionally, licenses all U.S. OTIs and requires registration of all foreign NVOCCs 

serving U.S. trades.

The FMC carries out its regulatory responsibilities by conducting informal and formal investigations, 

holding hearings, considering evidence, rendering decisions, issuing appropriate orders, and 

implementing regulations. A vigorous enforcement program is carried out, assessing civil penalties for 

Shipping Act violations. The FMC also adjudicates and mediates disputes involving the regulated 

community, the general shipping public, and other affected individuals or interest groups.

All of the above activities are supported by the FMC’s management and support functions of

information technology, budget and financial management, human resources, and management 

services.
Management’s Discussion and Analysis

8

Agency Mission Challenges

The Commission is well-informed of the issues and challenges facing the U.S. ocean transportation 

system at present, and will continue to center its efforts on fostering a viable and vibrant liner shipping 

environment so vital to the nation’s international trade and economic growth. As a small, independent

agency with a broad mandate, we strive to accomplish our strategic goals by improving efficiencies 

and closely managing our resources in order to enforce the Commission’s governing statutes and 

regulations to protect the shipping public. As the agency’s financial resources allow, we will continue

to invest in information technology to improve information security, efficiency, and greater public 

access, while reducing costs over time. 

Regulatory Review

Although small, the FMC is tasked with a large mandate. The Commission’s size, which provides for 

challenges in balancing workloads and required functions, is also an advantage. Offices and bureaus 

effectively work together to complete its goals. As part of its program evaluation, the Commission 

has undertaken a retrospective review plan to systematically examine and seek public input on its key 

regulations. 

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

effectiveness. As economic conditions alter the state of our trades, regulations are revised to respond 

to new conditions. As part of an ongoing Plan for Retrospective Review of Existing Rules (initiated 

in FY 2012), the FMC is reviewing, evaluating, and making recommendations for improvements to its 

regulatory requirements concerning the filing and processing of agreements, quarterly monitoring 

reports, and agreement meeting minutes. 

In FY 2015, the Commission considered a staff recommendation and comments from industry and 

the public regarding new ocean transportation intermediary licensing and financial responsibility 

requirements. In October 2015, the Commission voted to issue new regulations that will require 

online license renewal every three years, beginning in late 2016. A review of the regulations governing 

service contracts and NVOCC service arrangements continued in FY 2015, and the Commission will 

issue an Advanced Notice of Proposed Rulemaking in early FY 2016. A review of the Marine Terminal 

Operator Schedule regulations is underway and, in FY 2016, a review of the Carrier Automated Tariff 

regulations is scheduled.

Alliance and Vessel Sharing Agreements

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

with particular emphasis on issues of adequate vessel capacity and equipment availability. The difficult 

economic environment has caused significant developments among vessel operating carriers with 

respect to the complexity and scope of agreements that have been filed with the Commission. These 

agreements include highly coordinated alliance agreements and vessel sharing agreements among the 

largest container vessel operators in the world. New operational agreements among carriers and 

marine terminal operators seek to address operations at numerous U.S. ports. The Commission weighs 

the competitive impacts of agreements. Recent agreements filed with the Commission have cleared 

its review, but with the imposition of specifically tailored reporting requirements and the 

Commission’s requests for additional information. The additional information will help ensure that 
Management’s Discussion and Analysis

9

the Commission can quickly identify conditions under an agreement that result in a reduction in 

competition that unreasonably reduces services or unreasonably raises shipping rates.

Port Congestion and Security Initiatives

The FMC remains focused on efficiency in the United States’ ocean transportation system. The 

growing problem of widespread congestion at U.S. ports and inland locations challenges efficient 

transportation. In FY 2015, the Commission put forward reports on port congestion and demurrage 

and detention issues facing U.S. shippers and the industry. The Commission continues to work with 

the industry to develop strategies to create solutions to port congestion and other industry-related 

problems. The Commission has reviewed two significant agreement filings to address severe 

congestion at ports and terminals along the U.S. west coast, the Los Angeles and Long Beach Port 

Infrastructure and Environmental Programs Cooperative Working Agreement and the Pacific Ports 

Operational Improvements Agreement. The Commission will closely monitor these agreements for 

any emerging competitive impacts. Further, in FY 2015, the FMC weighed in on congestion 

surcharges that may not have met legal requirements. Ultimately, congestion surcharges were not 

assessed. 

The FMC participates with other agencies in U.S. oceanborne commerce security initiatives to protect 

the U.S. public. The Commission shares data with Federal agencies engaged in homeland security to 

improve the flow of information and identification of entities providing and utilizing maritime 

transportation services. To facilitate these activities, the FMC has executed a Memorandum of 

Understanding (MOU) with U.S. Customs and Border Protection providing for more efficient 

utilization of existing systems and services. The FMC also has an active MOU with the Census Bureau, 

U.S. Department of Commerce, providing the FMC with access to the Census’ Automated Export 

System (AES) database. These MOUs allow the FMC to handle and use confidential U.S. export 

shipment data to accomplish its mission and to protect the nation’s security interests. The FMC 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 21 Federal and international agencies targeting intellectual property- and trade-related 

crimes.

Enforcement, Dispute Resolution and Public Information

With the increasing pressure of industry consolidation, environmental concerns, port congestion, and 

rising energy costs, the Commission is particularly sensitive to the impact on the nation’s exporters 

and their need for efficient ocean transportation in reaching foreign markets. The FMC will continue 

to monitor 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. 

The FMC provides direct services to the public through a number of offices, programs, and the FMC’s 

website. The Commission’s Office of Consumer Affairs and Dispute Resolution Services receives 

time-sensitive requests for assistance (through e-mail and calls to its toll-free number) from shippers 

and carriers. The Commission’s Area Representatives, strategically located at key maritime ports (Los 

Angeles, South Florida, Houston, New Orleans, New York/New Jersey and Seattle/Tacoma),
Management’s Discussion and Analysis

10

commonly operate as the “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 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 

through on-camera interviews and print media. 

The FMC plays an important role in improving international commerce and assisting with industrydriven solutions to ocean shipping issues. In FY 2015, the Commission released reports analyzing the 

problems of port-related congestion and demurrage and detention, and continues to develop strategies 

to create solutions to industry-related problems. 

Encouraging Economic Growth

The FMC’s mission directly supports the President’s commitment to economic growth and job 

creation. The FMC’s important work fosters economic growth through effective shipping and 

infrastructure practices. Commission programs related to monitoring international oceanborne trade 

conditions, and carrier and marine terminal operator agreements ensure the free flow of shipping 

commerce and efficient supply chains for both the import and export of goods for domestic 

production and consumption. 

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 FMC has organized its performance goals 

to achieve its strategic goals. The FMC’s Strategic Plan Fiscal Years 2014-2018 (Revised) is available on 

the FMC’s website. The complete FY 2015 Program Performance Report is contained in the Program 

Performance section of this report.

During FY 2015, the Commission continued to make progress in modernizing its business processes. 

The Commission is responding to changing conditions affecting the state of our trades, including 

licensing, agreements, and contracting practices. In FY 2015, the Commission issued a proposed rule 

updating ocean transportation intermediary licensing and financial responsibility requirements. The 

Commission will issue a final rule in early FY 2016. A review of the regulations governing service 

contracts and NVOCC service arrangements continued in FY 2015, and the Commission will issue an 

Advanced Notice of Proposed Rulemaking regarding its service contract regulations in early FY 2016. 

Achieving Strategic Goal Results

The FMC developed performance goals that promote both of its strategic goals and support the its

mission. In developing the performance goals, the Commission considered the outcome resulting 

from achieving each performance goal. Specific targets and activities must be accomplished to meet 

the identified performance goals. Fiscal year 2015 was the seventh year in which the FMC undertook 

to quantify and measure performance goals. The Commission’s actual performance in FY 2015 is 

compared with the targeted levels of performance established in the agency’s Strategic Plan Fiscal Years 

2014-2018 (Revised). Taken together, performance measures and targets under each strategic goal were 

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

achievement of its strategic goals. Our experience in the years 2010 through 2014 enabled us to set 

realistic targets for FY 2015 in the revised strategic plan.
Management’s Discussion and Analysis

11

Historical Performance of Strategic Goals and Objectives

Strategic Goal Objective Performance Measures 2012 2013 2014 2015

Goal 1. Maintain an 

efficient and 

competitive 

international ocean 

transportation 

system.

1. Enhance efficiency 

in the trades through 

the 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.**

TARGET

19% 19.5% 39.5% 40%

ACTUAL

18.7% 19.5% 45.6% 49%

Goal 2. Protect the 

public from unlawful, 

unfair and deceptive 

ocean transportation 

practices and resolve 

shipping disputes.

1. Identify and take 

action to end 

unlawful, unfair and 

deceptive practices.

Percentage of enforcement 

actions taken under the 1984 

Act successfully resolved 

through favorable judgment, 

settlement, issuance of default 

judgment, or compliance letter 

or notice.

TARGET

74% 76% 76.5% 77%

ACTUAL

88% 78.9% 83.8% 83.4%

2. Prevent public 

harm through 

licensing and 

financial 

responsibility 

requirements.

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.

TARGET

70% 75% 75% 75%

ACTUAL

90.2% 87.6% 71.3% 72%

Percentage of cruise line 

operators examined during the 

year that have the full financial 

coverage required by regulation 

to protect against loss from 

non-performance or casualty.

TARGET

92% 93% 94% 95%

ACTUAL

100% 100% 96.7% 96%

3. Enhance public 

awareness of agency 

resources, remedies 

and regulatory 

requirements through 

education and 

outreach.

Percentage of key Commission 

issuances, orders, and reports 

are available through the 

Commission’s website within 5 

working days of receipt.

TARGET

74% 76% 76% 78%

ACTUAL

79% 86% 93% 92%

4. Impartially 

resolve international 

shipping disputes 

through ADR and 

adjudication.

Number of cases opened and 

closed each fiscal year using 

ombuds and ADR services to 

assist consumers in recovering 

goods or funds.

TARGET

700 800 825 825

ACTUAL

893 800 994 882

Percentage of formal 

complaints or Commissioninitiated orders of investigation 

completed within 2 years of 

filing or Commission initiation.

TARGET

54% 56% 58% 58%

ACTUAL

73% 91% 88% 90%

* This objective was revised for FY 2014-2018. In FY 2013, the objective was: identify and take action to address 

substantially anti-competitive conduct or unfavorable conditions in U. S. trades. The target for FY2013 was 19.5%.

** This measure was revised for FY 2014-2018. In FY 2013, the measure was: percentage share of total U.S. international 

oceanborne trade moved by containership, as an indicator of liner shipping efficiency. The target for FY 2013 was 19.5%.
Management’s Discussion and Analysis

12

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

Strategic Management of Human Capital – In 2015, the FMC continued to implement the 

strategic goals, strategies, and measures of results outlined in the 2012-2017 Human Capital Plan, 

Workforce Plan, and Accountability Plan. The Commission’s Human Capital Plan was developed 

under the OPM’s Human Capital Assessment and Accountability Framework, and provides for 

recruiting and retaining a talented workforce, and to appropriately manage succession in the 

Commission’s small workforce.

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

improved marketing of the FMC; streamlining of the application process in alignment with Hiring 

Reform; targeting recruitment pools and areas of consideration to increase the diversity of applicants; 

and incorporates organizational needs based on the annual OPM Federal Employee Viewpoint Survey 

results. In order to meet mission objectives, the FMC is actively working to define and plan for the 

workforce of the future, consistent with the current Administration’s programs and reform initiatives.

Strong leadership is a critical asset, and at the close of FY 2015, 50 percent of the FMC’s executives 

were eligible for optional retirement. The Commission is engaged in succession management and 

projecting its future needs. Current staff are developed to prepare individuals 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. As funds become available, training and development 

in leadership competencies within a technical context will be provided to prepare the next generation 

of leaders at the Commission. 

Competitive Sourcing - The FMC submitted its FY 2015 Federal Activities Inventory Reform Act 

(FAIR Act) Inventory to OMB in June 2015. The Inventory identified 68 of the agency’s 124

authorized Full-time Equivalent employees (FTEs) as commercial activity FTEs. No challenges to its 

commercial inventories have ever been received.

Improved Financial Performance - The FMC received an unmodified (“clean”) opinion on its 

financial statements in FY 2015. The FMC will continue to strive to achieve unmodified audit 

opinions.

Expanded E-Government - During FY 2015, the FMC continued to monitor public usage trends 

and leverage user feedback to implement ongoing improvements to www.fmc.gov. Public feedback 

was used to increase the quality, clarity, and accessibility of content provided to the shipping public. 

Achievements in FY 2015 include: 

• Improving global navigation based on user search terms and improving visibility of 

important information; 

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

• Planning and initiation of a major platform migration and extensive improvements to the 

information architecture of www.fmc.gov.

The Commission’s information technology capabilities were modernized and enhanced in a number 

of areas. The planned multiyear transition to use Enterprise Content Management (ECM) technology
Management’s Discussion and Analysis

13

for managing business activities and information needs is continuing to progress. Notable FY 2015

IT achievements include:

• Data previously stored on in-house fileservers was migrated to the One Drive for ease of 

access for collaboration, teleworking, and to aid in our Continuity of Operations Plan; 

• All desktop operating systems were upgraded to Windows 8.1, and the Microsoft Office Suite 

2007 was upgraded to Office 2013. VPN connections to all six field offices were upgraded. 

The Commission’s email system was migrated from Google mail to Office 365 in the Cloud;

• All servers were replaced with more robust servers which are more productive. This upgrade 

had an instant impact on SERVCON and all of the application databases that support both 

the FMC and the industry;

• All server operating systems were upgraded to Microsoft Server 2012, the database server was 

upgraded from Microsoft SQL 2005 to Microsoft SQL 2012, and all Cisco routers, switches, 

and firewalls were upgraded;

• SharePoint in the Cloud was implemented, and the Commission’s new Intranet site was 

launched, allowing FMC users easy access to its business applications anywhere they are able 

to connect to the internet through Office 365; 

• The Commission’s Disaster Recovery (DR) site is now configured, tested, and fully functional. 

New technology was used to make the DR site a “hot site,” which is configured so that the 

production server at FMC headquarters frequently replicates data to the server at the DR site. 

If a disaster occurs, the DR site would allow access to current systems to maintain Commission 

operations; and 

• Line of Business applications are being modernized. The Commission is currently in the User 

Acceptance testing stage of the Licensing and Registration Application (“LARA” - formerly 

known as the FMC-18 application). We anticipate that the modernization of this application 

will be completed in FY 2016.

Performance Improvement – The Strategic Plan represents the fundamental framework for the 

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

Commission’s performance budget planning document by strategic goal to identify clearly the 

budgetary and staff resources that are committed to the performance of each goal.
Management’s Discussion and Analysis

14

Financial Performance Overview

The FMC’s financial condition as of September 30, 2015, is sound, and a number of internal controls

are in place to ensure its budget authority is not exceeded, and that funds are utilized efficiently and 

effectively. The FMC’s accounting services provider, the Bureau of the Fiscal Services (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 

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

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

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 2015 appropriations for the FMC in the amount of $25,660,000 

through P.L. 113-235, which is an increase of $991,000 above the FY 2014 final appropriation level. 

Additionally, the Commission had reimbursable budget authority of $138,030 for work performed by 

FMC staff at other government entities. 

Although the FMC collects remittances for user fees and penalties, the agency is not authorized to 

offset any of its budget authority by utilizing 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

19,340 20,294 20,427

22,072 22,800 24,135 24,087 24,100

22,839

24,669 25,660

0

5,000

10,000

15,000

20,000

25,000

30,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

FISCAL YEAR

APPROPRIATION HISTORY ($000) 

FISCAL YEARS 2005 - 2015
Management’s Discussion and Analysis

15

Full-time Equivalent History

The FMC’s FTE level is largely driven by our annual appropriation level; however, unanticipated 

vacancies in such offices as the Offices of the Commissioners have sometimes remained unfilled for 

lengthy periods of time, awaiting Presidential and Congressional action. The FMC has maintained a 

full complement of Commissioners since June 2011. 

The FTE level declined annually from 2004 through 2008, followed by increases in 2009 through 

2011. In 2013, the Commission’s FTE level dropped, and in 2014, it dropped further to the lowest 

level since the late 1970s. The Commission experienced a number of unanticipated retirements and 

separations in 2014, resulting in a lower than anticipated FTE level. The FMC’s actual FTE level for 

2015 was 117, with 121 employees on board at fiscal year’s end. The Commission has endeavored to 

develop the appropriate mix of staffing and other available means to ensure effective accomplishment 

of its mission. 

124 121 119 115 120

127 128

123 119 113 117

0

75

150

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fiscal Year

FULL-TIME EQUIVALENT HISTORY 

FISCAL YEARS 2005 - 2015
Management’s Discussion and Analysis

16

Uses of Funds by Expense Category

During FY 2015, obligations against the FMC’s appropriation totaled $25,642,375, representing 

99.93% of the funding level. The Commission spent $25.642 million as follows: 67.7% for salaries 

and benefits, 0.7% for official travel expenses, and 31.6% for administrative expenses (e.g., rent, 

government and commercial contracts, telephones, and IT services and equipment). The balance of 

$17,625 will be allocated to legitimate increases to existing FY 2015 obligations.

Audit Results

The FMC again received an unmodified (“clean”) opinion on its FY 2015 financial statements from 

the auditing firm of Regis & Associates, P.C. under contract through the FMC’s OIG. Comparative 

statements are located in the Financial Information section of this report.

17,355

185

8,102

16,878

136

7,641

$0

$5,000

$10,000

$15,000

$20,000

FY 2015 FY 2014

Salaries & Expenses Travel Administrative Expenses

Utilization of Funds by Expense Categories

($000s)
Management’s Discussion and Analysis

17

Financial Statement Highlights

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

of the Commission pursuant to the requirements of 31 U.S.C. § 3515(b). While the statements have 

been prepared from the books and records of the Commission in accordance with 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. 

One implication of this is that liabilities cannot be liquidated without 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.

Summary of Assets

The FMC’s assets were $4,825,958 as of September 

30, 2015. This represents an increase from FY 

2014 of $314,604. The FMC’s assets reported in 

the balance sheet are summarized in the 

accompanying table. 

The Fund Balance with Treasury of $4,397,659

represents the FMC’s largest asset and represents 

91.1% of the agency’s total assets. This is an 

increase of $292,531 from FY 2014. 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, 2015 was $19,987 for outstanding receivables billed to both 

Federal and non-Federal entities. This accounts for 0.4% of the FMC’s assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 8.5% of the FMC’s 

total assets as of September 30, 2015. The net value of $408,312 accounts for the depreciation of all 

assets and represents the current book value of those assets.

FY 2015 FY 2014

Fund Balance with Treasury $4,397,659 $4,105,128

Accounts Receivable $19,987 $1,520

Capital Assets $408,312 $404,706

Other $0 $0

Total Assets $4,825,958 $4,511,354

Summary of Assets as of 

September 30, 2015
Management’s Discussion and Analysis

18

Summary of Liabilities

The FMC’s Liabilities totaled $2,443,691 as 

of September 30, 2015, an increase of 

$342,046 total liabilities from FY 2014. The 

majority of the increase is related to 

additional obligations where the goods 

and/or services have yet to be received or 

vendor(s) have not submitted billings for 

delivered orders.

The FMC’s accounts payable as of September 30, 2015 was $537,340. This represents the funds owed 

for goods and services received from vendors. Federal employee benefits represent accrued salaries 

and liabilities that are not funded by budgetary resources. These liabilities represent future workers’ 

compensation and accrued annual leave that remains on the books. The Federal budget process does 

not recognize future benefits for today’s employees; however, these liabilities will be recognized in 

future budget cycles as they are paid.

Analysis of Changes in Net Position Summary

The Changes in Net Position Summary 

reports the change in the Commission’s net 

position during the reporting period. The 

statement is a summary of two factors, 

Unexpended Appropriations - the amount of 

spending authority that remains unused at the 

end of the fiscal year and Cumulative Results 

of Operations - the cumulative excess of 

financing resources over expenses. The total net position for FY 2015 is a decrease of $27,442 from 

FY 2014.

Net position is the residual difference between assets and liabilities and is comprised of Unexpended 

Appropriations and Cumulative Results of Operations. Unexpended Appropriations represent the 

amount of unobligated and unexpended budget authority for the 5 year period ending on 

September 30, 2015. 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 is the net result of FMC’s operations for all active 

fiscal years. 

FY 2015 FY 2014

Accounts Payable $537,340 $529,765

Payroll Taxes $130,733 $96,301

Federal Employee Benefits $0 $787

Custodial Liabilities $2,163 $1,753

Accrued Liabilities $1,773,455 $1,473,039

Total Liabilities $2,443,691 $2,101,645

Summary of Liabilities as of 

September 30, 2015

FY 2015 FY 2014

Unexpended Appropriations $3,167,730 $3,129,440

Cumulative Results of Operation ($785,463) ($719,731)

Total Net Position $2,382,267 $2,409,709

Changes in Net Position Summary as of

September 30, 2015
Management’s Discussion and Analysis

19

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. 

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 2015, the FMC had total budgetary resources available of 

$26,470,532, representing an increase of $1,289,002 over 2014. The FMC incurred total obligations 

during FY 2015 of $26,168,073. The budgetary resources represent financial activity during the 

accounting period for the five active fiscal years.

FY 2015 FY 2014

Operational and Administrative $18,283,294 $16,120,903

Formal Proceedings $7,781,594 $7,476,772

Office of the Inspector General $450,246 $314,541

Office of Equal Employment 

Opportunity $153,307 $193,139

Total Net Cost $26,668,441 $24,105,355

Net Cost Summary as of 

September 30, 2015

FY 2015 FY 2014

Obligations Incurred $26,168,073 $24,794,326

Unobligated Balance Unavailable $284,834 $368,993

Unobligated Balance Available $17,625 $18,211

Total Status of Budgetary Resources $26,470,532 $25,181,530

Statement of Budgetary Resources as of

September 30, 2015

September 30, 2014

Statement of Budgetary Resources as of
Management’s Discussion and Analysis

20

Controls, Systems, and Legal Compliance

Internal controls are fundamental to the systems and processes that the FMC utilizes in managing its 

operations and achieving its strategic goals. As noted in the Chairman’s Statement of Assurance in 

the following section, the FMC does not have any material weaknesses or nonconformance to report 

for FY 2015. 

 

Federal Managers’ Financial Integrity Act

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

reasonably ensure that: (i) obligations and costs comply with applicable laws; (ii) assets are safeguarded 

against waste, loss, unauthorized use, or misappropriation; and (iii) 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 Chairman provide 

an assurance statement of the adequacy of management controls and conformance of financial systems 

with Government-wide 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. 

The Chairman has provided his annual assurance statement in this report. This statement was based 

on various sources, including management knowledge gained from the daily operation of Commission

programs and reviews, discussions with the Managing Director, and the Directors of the Offices of 

Budget and Finance and Management Services, audits of the financial statements, annual performance

plans, and OIG reports, among other sources. Additionally, the Chairman meets regularly with the 

Commission’s Senior Executive Service and receives regular reports from the FMC’s OIG. 

Management control deficiencies, when identified, are addressed at the highest management levels 

within the agency. For instance, any corrective actions for significant deficiencies identified in the 

agency’s 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 2015, management and the OIG 

reached agreement on 20 OIG audit recommendations. Management took action with respect to all 

recommendations and remedied 8. Management will continue work to implement the remainder of 

the IG’s recommendations during the next fiscal year. 

Debt Collection Improvement Act of 1996

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

debts. The Act 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. 

The collection of delinquent debts is conducted by the Bureau of Fiscal Services through the CrossServicing Program and Treasury Offset Program, where the names and taxpayer identification 

numbers (TIN) 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 of the FMC is to minimize the amount of delinquent debt owed to the government. 
Management’s Discussion and Analysis

21

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 2015, the FMC maintained a percentage of ontime payments of 99.3%.

In FY 2015, the FMC paid $148.00 in interest payments as a result of four late payments. The FMC 

will continue to strive towards maintaining 100% on-time vendor payments in future years.

Biennial Review of User Fees

The Chief Financial Officers Act requires agencies to conduct biennial reviews of fees and other 

charges imposed by agencies, and to make revisions to cover program and administrative costs 

incurred. During FY 2008, the Commission completed its biennial review of user fees. The OIG 

subsequently conducted a review of the methodology used to calculate the updated user fees.

A revised methodology for calculating user fees was developed in FY 2011. Performance goals and 

processing times for completion of certain user fee activities had changed dramatically since the review 

was performed in 2008, thus in FY 2012, management requested updated information from bureaus 

and offices on current processing times for all user fee activities in order to calculate user fees which 

accurately reflected the agency’s costs. In FY 2014, the fees were updated based upon actual FY 2013 

costs. The user fee working group concluded its review and provided its recommendations for 

Commission consideration. The Commission subsequently requested updated financial calculations 

from staff, which will be reviewed in early FY 2016.

Performance Measure Summary

The FMC does not have an in-house financial accounting system, and as a small agency 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 Fiscal Services. The 

Commission verifies and reconciles all financial statements and reports prior to submission, and has 

remained in compliance with all reporting thresholds. 
Management’s Discussion and Analysis

22

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. 

Briefly, during FY 2015, the Inspector General issued the following audit and review reports:

• Independent Auditors’ Report of FMC’s FY 2014 Financial Statements;

• FY2014 Financial Statement Management Letter;

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

Management Act FY 2014;

• Evaluation of the FMC’s FY 2014 Privacy and Data Protection;

• FMC Workplace Evaluation Report;

• Audit of Expenditures for Furnishing or Redecorating Commissioners’ 

Offices; and

• Improper Payments Elimination and Recovery Act of 2010 (IPERA).

The agency addressed a number of recommendations from these reviews, and it is expected that 

progress will be made to address the remaining open recommendations during FY 2016. 

During FY 2015, no significant deficiencies were identified.

Treasury Assurance Statement - USA Spending Reconciliation

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

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

underlying spending.
Management’s Discussion and Analysis

23

Freeze the Footprint

OMB Memorandum 12-12, Section 3, Promoting Efficient Spending to Support Agency Operations and 

Management Procedures Memorandum 2013-02, “Freeze the Footprint” policy implementation

guidance, require agencies to report total square footage associated with agency assets and annual

operating costs. Although not a CFO Act agency, the FMC is committed to working closely with the 

General Services Administration to better steward government resources and align the size of Federal 

real property assets with actual program needs. In FY 2014, the FMC relocated a field office from 

New York City to New Jersey, slightly increasing its space but resulting in savings due to the lower 

cost of the new lease. Also in FY 2014, approximately 705 rentable square feet of headquarters space

was released to GSA.1 In FY 2015, FMC released approximately 1,615 rentable square feet. An

additional potential reduction in office space (and associated cost savings) was identified, and the FMC 

is currently working with GSA to reduce and reconfigure space at headquarters. The agency will 

continue to evaluate its space needs going forward. 

FY 2015 - FMC Square Footage2 (Rentable Square Footage)

Location Square Footage Comment

Headquarters 61,191 60,822 + 1,369 in joint use space3

Houston 547

Los Angeles 838

New Orleans 2504 Space is provided at no cost by DHS–CBP

New York/New Jersey 1,405

Seattle/Tacoma 451

South Florida 1,249

TOTAL 66,931

Footprint Baseline Comparison (Usable Square Footage)

FY 2012 (Baseline) FY 2013 FY 2014 FY 2015

Total Square 

Footage 58,208 58,208 58,530 57,237

Reporting of O&M Costs – Owned and Direct Lease Buildings

FY 2012 

Reported Cost

FY 2013 

Reported Cost

FY 2014 

Reported Cost

FY 2015

Reported Cost

Change in 

Baseline 

2012-2015

Operation and 

Maintenance 

Costs 

$2,994,981 $3,191,702 $3,234,499 $3,296,731 $301,750

1 The FMC received a credit in FY 2015 for HQ space that was released to GSA in FY 2014 and FY 2015. 2 Previous years reported on usable square footage rather than rentable square footage. The usable square footage 

for FY 2015 is 57,237, which is a decrease from the usable square footage of 58,530 reported for FY 2014. FY 

2015 reported cost is based on rentable square footage.

3 Joint use space is only applicable to the HQ office space. Joint use space includes the fitness center, health unit 

and security office, which is divided among the tenant agencies in the building. 4 The square footage provided for the New Orleans field office is approximate. The FMC does not maintain a lease or 

pay rent on this space.
Management’s Discussion and Analysis

24

Chairman’s FMFIA Statement of Assurance

Management of the Federal Maritime Commission is responsible for establishing and maintaining an 

effective internal control and financial management system which meets the objectives of the Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA).

The FMC conducted its annual assessment of the effectiveness of the internal controls put in place 

by the organization to support effective and efficient programmatic operations, reliable financial 

reporting, and compliance with applicable laws and regulations, and to determine whether the financial 

management system conforms to applicable financial systems requirements in accordance with the 

requirements of the Office of Management and Budget (OMB) Circular A-123, Management’s 

Responsibility for Internal Control.

The FMC can provide reasonable assurance that its internal controls over the effectiveness and 

efficiency of operations, reliable financial reporting, and compliance with applicable laws and 

regulations as of September 30, 2015, were operating effectively and that no material weaknesses were 

found in the design or operation of our internal controls based on the results of this assessment.

Additionally, based on our assessment, we have determined that the financial management system 

acquired from the Bureau of Fiscal Services, an integrated, internet-based financial system using 

Oracle Federal Financials, conforms to applicable financial systems requirements.

/s/

Mario Cordero

November 16, 2015
PROGRAM PERFORMANCE

INFORMATION
Program Performance Information

26

Annual Performance Report

Introduction to Performance

The FMC’s performance management system includes specific strategic goals, performance measures, 

and targets. The strategic goals represent the FMC’s mission and reflect the overall outcomes and 

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

targets in 2015 in furtherance of the Commission’s mission to foster a fair, efficient and reliable 

international ocean transportation system, and to protect the public from unfair and deceptive 

practices. The FMC’s strategic goals and objectives are as follows:

• Maintain an Efficient and Competitive International Ocean Transportation System.

o Identify and take action to address substantially anti-competitive conduct or unfavorable 

conditions in U.S. trades.

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

and Resolve Shipping Disputes.

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 resolve international shipping disputes through alternative dispute resolution and 

adjudication. 

The FMC quantitatively measured seven performance goals during the fiscal year. Six out of seven 

measures reached and exceeded FY 2015 targets. Each measure, target, and actual result is reported 

in the summary table below (Table 1) and includes a description of the data used to measure 

performance along with an explanation of the procedures in place to validate and ensure integrity of 

the reported result. 

Trend data for measures in place since 2011 is reflected in Table 2 below. This data 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. Table 3 provides a status 

update on unmet targets for FY 2011 through FY 2015. 

The Strategic Plan was revised in FY 2011 to remove a third strategic goal and its associated objectives 

and measures. The third goal was established for administrative support functions such as human 

resources, information technology and financial management. Each of these important functions is 

subject to its own stringent planning and measuring regimes pursuant to various laws and executive 

mandates. Those related plans support the strategic plan and are referenced and described therein.

The Commission has forwarded this report to the President, with a copy to the Director, OMB, and 

appropriate Congressional committees. 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. 
Program Performance Information

27

Table 1: Summary of Performance Measure Results – FY 2015

Targeted performance compared to actual results.

Strategic Goal No. 1: Maintain an efficient and competitive 

international ocean transportation system.

Performance Measure FY 2015

Target

FY 2015

Actual

Measure: Percentage share of U.S. containerized cargo moving on other agreement 

parties’ vessels in major U.S. trades. 

2015 Target: 40%

Validation: This outcome goal is measured by using information from several 

different commercial sources that collectively provide the number of loaded containers 

(TEUs) carried by vessels operating in selected major U.S. trade lanes while separately 

enumerating the number of TEUs carried by each vessel for the ship operator’s own 

account and the number of TEUs carried by the vessel on behalf of other vessel 

operating common carriers (i.e., on behalf of third-parties). The vessels’ data are 

aggregated, and the total number of TEUs carried on behalf of third-parties is divided 

by the total number of TEUs carried in the trades selected. The measure is applied to 

the transpacific and transatlantic liner trades, which together account for about twothirds of all U.S. container cargo. 

40% 49%

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

transportation practices and resolve shipping disputes.

Performance Measure FY 2015

Target

FY 2015

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.

2015 Target: 77%

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% 83.4%

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.

2015 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. 

BCL’s target for processing OTI applications was not fully met, i.e., 72%, the target of 

75%, due to hiring and retention challenges in BCL. BCL is now operating at a full 

complement and the FMC anticipates meeting this goal next fiscal year.

75% 72%
Program Performance Information

28

Measure: Percentage of cruise line operators examined during the year that have the 

full financial coverage required by regulation to protect against loss from nonperformance or casualty.

2015 Target: 95%

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

amounts against required coverage amounts. Approximately 200 cruise vessels are 

registered in 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% 96%

Measure: Percentage of key Commission issuances, orders and reports that are 

available through the Commission’s website within 5 working days of receipt.

2015 Target: 78%

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, and as such, 

any discrepancies are discovered and remedied quickly.

78% 92%

Measure: Number of cases opened and closed each fiscal year using ombuds and ADR 

services assisting consumers to recover goods or funds.

2015 Target: 825

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

on each such case opened and closed.

825 882

Measure: Percentage of formal complaints or Commission initiated orders of 

investigation completed within two years of filing or Commission initiation.

2015 Target: 58%

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

the Commission. The docket logs are used on a daily basis by agency staff and by the 

public, and as such, any discrepancies are discovered and remedied quickly.

58% 90%
Program Performance Information

29

Table 2: Performance Measure Trends FY 2011-2015

Strategic Goal No. 1: Maintain an efficient and competitive international ocean transportation system.

Performance Measure

FY 

2011

Target

FY 

2011

Actual

FY 

2012

Target

FY 

2012

Actual

FY 

2013

Target

FY 

2013

Actual

FY 

2014

Target

FY 

2014

Actual

FY

2015 

Target

FY 

2015 

Actual

Measure: Percentage share of U.S. 

containerized cargo moving on other 

agreement parties’ vessels in major 

U.S. trades. 

18.5%

* 17.9% 19%* 18.7% 19.5%* 19.5% 39.5% 45.6% 40% 49%

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.

72% 82% 74% 88% 76% 78.9% 76.5% 83.8% 77% 83.4%

Measure: Percentage of decisions on 

completed OTI license applications 

rendered within 60 calendar days of 

receipt, facilitating lawful operation of 

OTIs with appropriate character and 

experience requirements.

60% 77% 70% 90.2% 75% 87.6% 75% 71.3% 75% 72%

Measure: Percentage of cruise line 

operators examined during the year 

that have the full financial coverage 

required by regulation to protect 

against loss from non-performance or 

casualty.

91% 91% 92% 100% 93% 100% 94% 96.7% 95% 96%

Measure: Percentage of attendees at 

agency sponsored outreach 

presentations that rate the program as 

“Useful” or “Extremely Useful” in 

their compliance efforts.

75% N/A* N/A* N/A* N/A* N/A* N/A* N/A* N/A* N/A*

Measure: Percentage of key 

Commission issuances, orders and 

reports available through the 

Commission’s web-site within 5 

working days of receipt.

72% 72% 74% 79% 76% 86% 76% 93% 78% 92%

Measure: Number of cases opened 

and closed each fiscal year using 

ombuds and ADR services assisting 

consumers to recover goods or funds.

625 631 700 893 800 800 825 994 825 882

Measure: Percentage of formal 

complaints or Commission-initiated 

orders of investigation completed 

within two years of filing or 

Commission initiation.

52% 60% 54% 73% 56% 91% 58% 88% 58% 90%

* In consultation with OMB, results for performance measure, “Percentage share of total U.S. international oceanborne trade moved by containership 

as an indicator of liner shipping efficiency” is reflected in the years 2010-2013. The outcome goal was changed in 2013. Also, the measure “Percentage 

of attendees at agency sponsored outreach presentations that rate the program as ‘Useful’ or ‘Extremely Useful’ in their compliance efforts,” is not 

reflective of current agency outreach practices. It also proved logistically difficult to execute because most outreach is performed by FMC staff as 

invitees at non-FMC sponsored events. This outcome goal was removed for FY 2011 – 2015.
Program Performance Information

30

Table 3: Status of Unmet Targets, 2011 - 2015

Performance Measure (2011) FY 2011

Target

FY 2011

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership as an 

indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient Competitive 

International Ocean Transportation System (2011) 

18.5% 17.9%

Performance Measure (2012) FY 2012

Target

FY 2012

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership as an 

indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient Competitive 

International Ocean Transportation System (2012)

19% 18.7%

Performance Measure (2013) FY 2013

Target

FY 2013

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2013)

All Targets All Targets 

Reached

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

transportation practices and resolve shipping disputes (2013)

All Targets All Targets 

Reached

Performance Measure (2014) FY 2014

Target

FY 2014

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2014)

All Targets All Targets 

Reached

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. 

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

practices and resolve shipping disputes (2014)

75% 71.3%

Performance Measure (2015) FY 2015

Target

FY 2015

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2015)

All Targets All Targets 

Reached

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.

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

practices and resolve shipping disputes (2015)

75% 72%
FINANCIAL INFORMATION
Financial Information

32

Message from the Chief Financial Officer

I am pleased to present the financial section of this Performance and Accountability Report. The

Commission’s financial position is fairly presented in the accompanying financial statements and 

related notes, which were prepared in conformity with accounting principles generally accepted in the 

U.S., and requirements set forth in Office of Management and Budget (OMB) Circular No, A-136, 

Financial Reporting Requirements. 

During FY 2015, the Commission continued to focus on its statutory responsibilities while practicing 

fiscal discipline on behalf of the American people. FY 2015 marks the 12th consecutive year that the 

FMC received an unmodified (“clean”) opinion on our financial statements. This unmodified opinion 

on the FMC’s financial statements highlights the continuing commitment of this agency to maintain 

sound financial management of the resources entrusted to us. The FMC’s financial condition is sound, 

and the Commission has sufficient internal controls in place to ensure that its budget authority is not 

exceeded, and that funds are utilized efficiently and effectively. 

FY 2015 included the following key accomplishments, demonstrating the effectiveness and efficiency 

of the FMC’s acquisition and financial functions:

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

nonconformance with the Federal Managers’ Financial Integrity Act and other applicable 

laws and regulations;

• Collecting, in civil enforcement proceedings and user fees, more than $2,299,800 on behalf 

of the American public;

• Continued focus on internal controls, as mandated by OMB Circular A-123, providing 

budget information in concise and reliable formats; and

• 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 FMC in accordance with Generally Accepted Accounting Principles (GAAP), 

standards approved by the Federal Accounting Standards Advisory Board (FASAB), and 

OMB Circular A-136, Financial Reporting Requirements.

The FMC remains committed to exemplary financial management and strives to enhance operational 

efficiency. This report makes evident our commitment to fulfill our fiduciary responsibilities. I am 

proud of the role the FMC has played in effectively stewarding its limited resources, continuing to

protect the interest of the American shipping public, particularly during times of fiscal challenges. I 

am confident that we will continue to use sound business practices to accomplish our regulatory 

mission, and that we will continue such improvements in the future. 

Sincerely,

/s/

Vern W. Hill, Chief Financial Officer

November 16, 2015
Financial Information

33

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. 

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 Regis & Associates, PC, under contract 

to the FMC’s Office of the Inspector General.
Financial Information

34

FEDERAL MARITIME COMMISSION

Washington, DC 20573

Place

November 10, 2015

Office of Inspector General

Dear Chairman Cordero and Commissioners:

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) 2015 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 Regis & 

Associates, P.C. (Regis) to: perform the audit of the FMC’s financial statements for the fiscal

year ended September 30, 2015; 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, Regis 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 Regis & Associates’ 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. Regis & Associates is responsible for the attached auditors' report dated 

November 4, 2015 and the conclusions expressed in the report. However, our review disclosed 

no instances where Regis & Associates did not comply, in all material respects, with Generally 

Accepted Government Auditing Standards.
Financial Information

35

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

for their assistance in helping Regis & Associates 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
Financial Information

36

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2015 and 2014

MANAGEMENT CONSULTANTS &

 CERTIFIED PUBLIC ACCOUNTANTS
Financial Information

37

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2015 and 2014

TABLE OF CONTENTS

Independent Auditors' Report .......................................................................................... 1-3

Balance Sheet.......................................................................................................................4

Statement of Net Cost ..........................................................................................................5

Statement of Changes in Net Position .................................................................................6

Statement of Budgetary Resources......................................................................................7

Statement of Custodial Activity...........................................................................................8

Notes to Financial Statements........................................................................................ 9-21

Agency Comments on Draft Audit Report (Appendix A).................................................22
Financial Information

38

INDEPENDENT AUDITORS' REPORT

The Honorable Mario Cordero,

Chairman

Federal Maritime Commission

Washington, DC

Report on the Financial Statements 

We have audited the accompanying Financial Statement Report of the Federal Maritime 

Commission, which comprises the Balance Sheet as of September 30, 2015 and 2014, and the related 

Statement of Net Cost, Statement of Changes in Net Position, Statement of Budgetary Resources, 

Statement of Custodial Activity, and the related notes to the financial statements as of September 

30, 2015 and 2014.

Management's Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements, in 

accordance with U.S. Generally Accepted Accounting Principles. This includes the design, 

implementation, and maintenance of internal control, relevant to the preparation and fair presentation 

of the financial statements that are free from material misstatement, whether due to fraud or error. 

Auditor's Responsibility 

Our responsibility is to express an opinion on these financial statements, based on our audits. We 

conducted our audits in accordance with auditing standards generally accepted in the United States of 

America; the standards applicable to financial audits, contained in U.S. Government Auditing 

Standards, issued by the Comptroller General of the United States; and Office of Management and 

Budget’s (OMB) Bulletin No. 15-02, Audit Requirements for Federal Financial Statements. Those 

standards and OMB Bulletin No. 15-02 require that we plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free from material misstatement. An audit 

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 

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 agency'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 agency's internal control. Accordingly, we express no such opinion. An audit also 

includes evaluating the appropriateness of accounting policies used, and the reasonableness of 

significant estimates made by management, as well as evaluating the overall presentation of the 

financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate 

to provide a basis for our opinion. 
Financial Information

39

Opinion 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of the Federal Maritime Commission as of September 30, 2015 and 2014; and its 

net costs, changes in net position, budgetary resources, and custodial activity for the years then 

ended, in accordance with U.S. Generally Accepted Accounting Principles. 

Other Accompanying Information

Required Supplementary Information 

U.S. Generally Accepted Accounting Principles require that the information in the other accompanying 

information be presented to supplement the basic financial statements. Such information, although not 

a part of the basic financial statements, is required by the Federal Accounting Standards Advisory 

Board, which considers it to be an essential part of financial reporting for placing the basic financial 

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

limited procedures to the required supplementary information, in accordance with auditing standards 

generally accepted in the United States of America, which consisted of inquiries of management about 

the methods of preparing the information, and comparing the information for consistency with 

management's responses to our inquiries, the financial statements, and other knowledge we obtained 

during our audits of the financial statements. We do not express an opinion, or provide any assurance 

on the information, because the limited procedures do not provide us with sufficient evidence to 

express an opinion or provide any assurance. 

Restriction on Use of the Report on the Financial Statements 

This report is intended solely for the information and use of the management of the Federal Maritime 

Commission, the U.S. Department of the Treasury, OMB, and the U.S. Government Accountability 

Office, in connection with the preparation and audit of the Financial Report of the U.S. Government; 

and is not intended to be, and should not be, used by anyone other than these specified parties. 

Internal Control over Financial Reporting Specific to the Financial Statements

In planning and performing our audits of the financial statements as of, and for the years ended 

September 30, 2015 and 2014, we also considered Federal Maritime Commission's internal control 

over the financial reporting (internal control) to determine the 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 of the effectiveness of Federal Maritime Commission's internal 

control. Accordingly, we do not express an opinion on the effectiveness of Federal Maritime 

Commission's internal control. 

Our consideration of internal control was for the limited purpose described in the preceding paragraph, 

and was not designed to identify all deficiencies in internal control that might be material weaknesses 

or significant deficiencies and; therefore, material weaknesses or significant deficiencies may exist 

that were not identified. We did not identify any deficiencies in internal control that we consider to 

be material weaknesses or significant deficiencies. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in their normal course of performing their assigned functions, to prevent, 

or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a 
Financial Information

40

combination of deficiencies, in internal control, such that there is a reasonable possibility that a material 

misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a 

timely basis. 

A significant deficiency is a deficiency, or a combination of deficiencies in internal control, that is 

less severe than a material weakness, yet important enough to merit the attention by those charged 

with governance. There were no deficiencies in the accompanying financial statements that are 

considered to be significant deficiencies. 

Compliance and Other Matters Specific to the Financial Statements 

As part of obtaining reasonable assurance about whether Federal Maritime Commission's financial 

statements are free from material misstatement, we also performed tests of its compliance with certain 

provisions of laws, regulations, contracts, and agreements. However, we limited our tests of 

compliance to these provisions; and did not test compliance with all laws, regulations, and contracts 

applicable to the Federal Maritime Commission. 

The results of our tests of compliance disclosed no instances of non-compliance with laws, regulations, 

contracts, and agreements; or other matters that are required to be reported herein, under Government 

Auditing Standards and OMB Bulletin No. 15-02.

Providing an opinion on compliance with laws, regulations, and contracts was not an objective of our 

audit; and accordingly, we do not express such an opinion.

Purpose of the Other Reporting Required by Government Auditing Standards 

The purpose of the communication provided in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance, and 

the results of that testing, and not to provide an opinion on the effectiveness of the agency's internal 

control or on compliance. This communication is an integral part of an audit performed in accordance 

with U.S. Generally Accepted Government Auditing Standards in considering internal control and 

compliance with provisions of laws, regulations, contracts, and agreements that have a material effect 

on the financial statements. Accordingly, this communication is not suitable for any other purpose. 

Agency Comments and Our Evaluation 

The Federal Maritime Commission concurred with the facts and conclusions in our report. See 

Appendix A.

Regis & Associates, PC

Washington, DC

November 4, 2015
Financial Information

The accompanying notes are an integral part of these financial statements

41

FEDERAL MARITIME COMMISSION

BALANCE SHEET

AS OF SEPTEMBER 30, 2015 AND 2014

(IN DOLLARS)

 2015 2014

Assets:

Intragovernmental:

Fund Balance With Treasury (Note 2) $ 4,397,659 $ 4,105,128

 Accounts Receivable (Note 3) 14,540 -

 Total Intragovernmental 4,412,199 4,105,128

 Accounts Receivable, Net (Note 3) 5,447 1,520

 Property, Equipment, and Software, Net (Note 4) 408,312 404,706

Total Assets $ 4,825,958 $ 4,511,354

Liabilities:

Intragovernmental:

Accounts Payable $ 65,788 $ 104,117

Other ( Note 6) 117,760 86,032

 Total Intragovernmental 183,548 $ 190,149

 Accounts Payable 471,552 425,648

 Federal Employee and Veterans' Benefits (Note 5) - 787

 Other (Note 6) 1,788,591 1,485,061

Total Liabilities (Note 5) $ 2,443,691 $ 2,101,645

Net Position:

 Unexpended Appropriations - Other Funds $ 3,167,730 $ 3,129,440

Cumulative Results of Operations - Other Funds (785,463) (719,731)

Total Net Position $ 2,382,267 $ 2,409,709

Total Liabilities and Net Position $ 4,825,958 $ 4,511,354
Financial Information

The accompanying notes are an integral part of these financial statements

42

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(IN DOLLARS)

2015 2014

Program Costs:

Operational and Administrative 

 Gross Costs $ 18,323,598 $ 16,120,903

 Less: Earned Revenue (40,304) -

 Net Program Costs $ 18,283,294 $ 16,120,903

Formal Proceedings

 Gross Costs $ 7,803,458 $ 7,505,802

 Less: Earned Revenue (21,864) (29,030)

 Net Program Costs $ 7,781,594 $ 7,476,772

Office of Inspector General 

Gross Costs $ 450,246 $ 314,541

 Net Program Costs $ 450,246 $ 314,541

Office of Equal Employment Opportunity 

 Gross Costs $ 153,307 $ 193,139

 Net Program Costs $ 153,307 $ 193,139

Total Other Program Costs: $ 8,407,011 $ 7,984,452

Net Cost of Operations (Note 9) $ 26,668,441 $ 24,105,355
Financial Information

The accompanying notes are an integral part of these financial statements

43

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(IN DOLLARS)

2015 2014

Cumulative Results of Operations: 

 Beginning Balances $ (719,731) $ (910,588)

Budgetary Financing Sources:

 Appropriations Used 25,464,081 22,988,907

Other Financing Sources (Non-Exchange):

 Imputed Financing Sources (Note 10) 1,138,628 1,307,305

 Total Financing Sources 26,602,709 

24,296,212

 Net Cost of Operations (26,668,441) (24,105,355)

 Net Change (65,732) 190,857

Cumulative Results of Operations $ (785,463) $ (719,731)

Unexpended Appropriations:

 Beginning Balances $ 3,129,440 $ 1,820,115

Budgetary Financing Sources:

 Appropriations Received 25,660,000

 

24,669,000

 Other Adjustments (157,629) (370,768)

 Appropriations Used (25,464,081) (22,988,907)

Total Budgetary Financing Sources 38,290 1,309,325

Total Unexpended Appropriations $ 3,167,730 $ 3,129,440

Net Position $ 2,382,267 $ 2,409,709
Financial Information

The accompanying notes are an integral part of these financial statements

44

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(IN DOLLARS)

2015 2014

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 387,204 $ 585,311

Recoveries of Prior Year Unpaid Obligations 518,708 268,870

Other changes in unobligated balance (157,629) (370,768)

 Unobligated balance from prior year budget authority, net 748,283 483,413

 Appropriations 25,660,000 24,669,000

 Spending authority from offsetting collections 62,249 29,117

Total Budgetary Resources $ 26,470,532 $ 25,181,530

Status of Budgetary Resources:

 Obligations Incurred (Note 12) $ 26,168,073 $ 24,794,326

 Unobligated balance, end of year:

Apportioned (Note 2) 17,625 18,211

Unapportioned (Note 2) 284,834 368,993

 Total unobligated balance, end of year 302,459 387,204

Total Budgetary Resources $ 26,470,532 $ 25,181,530

Change in Obligated Balance

 Unpaid Obligations:

 Unpaid Obligations, Brought Forward, October 1 $ 3,717,924 $ 2,035,436

 Obligations Incurred (Note 12) 26,168,073 24,794,326

 Outlays (gross) (25,257,549) (22,842,968)

 Recoveries of Prior Year Unpaid Obligations (518,708) (268,870)

Unpaid Obligations, End of Year (Gross) $ 4,109,740 $ 3,717,924

 Uncollected payments

Change in Uncollected payments, Federal Sources (14,540) -

Uncollected Customer Payments, Federal Sources, End of Year (14,540) -

Obligated Balance, End of Year $ 4,095,200 $ 3,717,924

Budget Authority and Outlays, Net:

 Budget authority, gross $ 25,722,249 $ 24,698,117

 Actual offsetting collections (47,709) (29,117)

Change in uncollected Payments, Federal Sources (14,540) -

 Budget Authority, net (total) $ 25,660,000 $ 24,669,000

 Outlays, gross $ 25,257,549 $ 22,842,968

 Actual offsetting collections (47,709) (29,117)

 Outlays, net (total) 25,209,840 22,813,851

 Distributed Offsetting Receipts (248,451) (220,316)

 Agency Outlays, net $ 24,961,389  $ 22,593,535
Financial Information

The accompanying notes are an integral part of these financial statements

45

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY 

AS OF SEPTEMBER 30, 2015 AND 2014

(IN DOLLARS)

2015 2014

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 2,299,802 $ 3,185,724

Total Cash Collections (Note 14) 2,299,802 3,185,724

Accrual Adjustments (643) (1,247)

Total Custodial Revenue 2,299,159 3,184,477

Disposition of Collections:

Transferred to Others (by Recipient) 2,300,035 3,185,491

 Increase/(Decrease) in Amounts Yet to be Transferred 410 1,480

 Retained by the Reporting Entity (1,286) (2,494)

Net Custodial Activity $ - $ -
Financial Information

The accompanying notes are an integral part of these financial statements

46

FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The Federal Maritime Commission 

(“FMC” or “the Commission”) was 

established as an independent regulatory 

agency on August 12, 1961. The FMC is 

responsible for the regulation of ocean

borne transportation in the foreign 

commerce of the United States (U.S.). 

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 

Commission 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 nonrecurring activity, such as fines, penalties,

fees and other miscellaneous receipts for

services and benefits. 
Financial Information

The accompanying notes are an integral part of these financial statements

47

The FMC makes custodial collections and 

holds custodial receivables that are nonentity assets and are transferred to 

Treasury at fiscal year end. The FMC has 

rights and ownership of all assets reported 

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 agency. The Statement of 

Net Cost presents the agency’s operating 

results; the Statement of Changes in Net 

Position displays the changes in the 

agency’s equity accounts. The Statement 

of Budgetary Resources presents the

sources, status, and uses of the agency’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
Financial Information

The accompanying notes are an integral part of these financial statements

48

purchases. Property, equipment, and 

software acquisitions that do not meet the 

capitalization criteria are expensed upon 

receipt. Applicable standard 

governmental guidelines regulate the

disposal and convertibility of agency

property, equipment, and software. The 

useful life classifications for capitalized 

assets are as follows:

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 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 o f

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)-

Description Useful Life 

(years)

Leasehold Improvements 5

Office Furniture 5

Computer Equipment 5

Office Equipment 5

Software 5
Financial Information

The accompanying notes are an integral part of these financial statements

49

covered employees, effective at 50% for 

the 1st quarter of FY 2014, and 100% 

thereafter.

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 

seven percent 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 one percent of pay, and 

FMC matches any employee contribution up 

to an additional four percent of pay. For FERS 

participants, FMC also contributes the 

employer’s matching share of Social Security.

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.

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
Financial Information

The accompanying notes are an integral part of these financial statements

50

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

G enerally 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 2015 and 2014 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.

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.

P. Reclassification

Certain fiscal year 2014 balances have been 

reclassified, re-titled, or combined with other 

financial statement line items for consistency 

with the current year presentation.
Financial Information

The accompanying notes are an integral part of these financial statements

51

NOTE 2- FUND BALANCE WITH TREASURY

Fund Balance With Treasury account balances as of September 30, 2015 and 2014 were as 

follows:

No discrepancies exist between the Fund Balance reflected on the Balance Sheet, and the balances 

in the Treasury accounts.

 2015 2014

Fund Balances: 

 Appropriated Funds $ 4,397,659 $ 4,105,128

Total $ 4,397,659 $ 4,105,128

Status of Fund Balance with Treasury:

 Unobligated Balance

 Available $ 17,625 $ 18,211

 Unavailable 284,834 368,993

 Obligated Balance Not Yet Disbursed 4,095,200 3,717,924

Total $ 4,397,659 $ 4,105,128

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 13).
Financial Information

The accompanying notes are an integral part of these financial statements

52

NOTE 3- ACCOUNTS RECEIVABLE

Accounts receivable balances for as of September 30, 2015 and 2014, were as follows:

2015 2014

Intragovernmental

 Accounts Receivable $ 14,540 $ -

Total Intragovernmental Accounts Receivable $ 14,540 $ -

2015 2014

With the Public

 Miscellaneous Accounts Receivable $ 5,141 $ 1,389

 Interest Receivable 21 -

 Penalties and Fines Receivable 285 131

Total Public Accounts Receivable $ 5,447 $ 1,520

Total Accounts Receivable $ 19,987 $ 1,520

The accounts receivable is primarily made up of services provided to other Intragovernmental 

agencies. Historical experience has indicated that the majority of the receivables are collectible. 

There are no material uncollectible accounts as of September 30, 2015 and 2014.

NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE

The Schedule of Property, Equipment, and Software as of September 30, 2015 is as follows:

Major Class

Acquisition

Cost

Accumulated

Amortization/

Depreciation

Net Book

Value

Leasehold Improvements $ 225,000 $ 225,000 $ -

Furniture & Equipment 502,537 324,249 178,288

Software-in-Development 230,024 - 230,024

Total $ 957,561 $ 549,249 $ 408,312
Financial Information

The accompanying notes are an integral part of these financial statements

53

NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE Cont’d

Schedule of Property, Equipment, and Software as of September 30, 2014 is as follows:

Major Class

Acquisition

Cost

Accumulated

Amortization/

Depreciation

Net Book

Value

Leasehold Improvements $ 225,000 $ 225,000 $ -

Furniture & Equipment 341,800 262,401 79,399

Software-in-Development 325,307 - 325,307

Total $ 892,107 $ 487,401 $ 404,706

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities of FMC as of September 30, 2015 and 2014 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.

 2015 2014

Unfunded Leave $ 1,197,058 $ 1,123,416

Actuarial FECA - 787

Custodial Liabilities 2,163 1,753

Total Liabilities Not Covered by Budgetary Resources $ 1,199,221 $ 1,125,956 

Total Liabilities Covered by Budgetary Resources 1,244,470 975,689

Total Liabilities $ 2,443,691 $ 2,101,645

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.
Financial Information

The accompanying notes are an integral part of these financial statements

54

NOTE 6- OTHER LIABILITIES

Other liabilities account balances as of September 30, 2015 were as follows:

Current

Non 

Current Total

Intragovernmental

 Payroll Taxes Payable $ 115,597 $ - $ 115,597 

 Custodial Liabilities 2,163 - 2,163

Total Intragovernmental Other Liabilities $ 117,760 $ - $ 117,760 7

With the Public

 Payroll Taxes Payable $ 15,136 $ - $ 15,136

 Accrued Funded Payroll and Leave 576,397 - 576,397

 Unfunded Leave 1,197,058 - 1,197,058

Total Public Other Liabilities $ 1,788,591 $ - $ 1,788,591

Other liabilities account balances as of September 30, 2014 were as follows:

Current

Non 

Current Total

Intragovernmental

 Payroll Taxes Payable $ 84,279 $ - $ 84,279 

 Custodial Liabilities 1,753 - 1,753

Total Intragovernmental Other Liabilities $ 86,032 $ - $ 86,032

With the Public

 Payroll Taxes Payable $ 12,022 $ - $ 12,022

 Accrued Funded Payroll and Leave 349,623 - 349,623

 Unfunded Leave 1,123,416 - 1,123,416

Total Public Other Liabilities $ 1,485,061 $ - $ 1,485,061
Financial Information

The accompanying notes are an integral part of these financial statements

55

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 2015 and 2014 were $3,277,725 and $3,433,323, respectively. The lease locations and 

terms are listed below:

Location Term Lease Expiration Date

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 03/15/2024

The operating lease amount does not include estimated payments for leases with annual renewal 

options. The schedule of future minimum payments for the term of the leases is as follows:

Fiscal Year Totals

2016 $ 3,189,633

2017 3,221,574

2018 3,419,625

2019 3,454,859

2020 3,469,921

Thereafter 7,330,851

Total Future Minimum Payments $ 24,086,463

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 knowledge of one 

lawsuit/investigation from FY 2014 where the amount of potential loss exceeds $48,000. The 

FMC has knowledge of one lawsuit/investigation from FY 2015 where the amount of potential 

loss exceeds $48,000. The Commission will be vigorously contesting both cases. 
Financial Information

The accompanying notes are an integral part of these financial statements

56

NOTE 9- INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other 

Federal government entities, and are in contrast to those with non-Federal entities (the public). 

Such costs and revenue are summarized as follows:

 2015 2014

Operational and Administrative 

 Intragovernmental Costs $ 3,727,051 $ 3,793,654

 Public Costs 14,596,547 12,327,249

Total Program Costs 18,323,598 16,120,903

Less: Intragovernmental Earned Revenue (40,304) -

Net Program Costs 18,283,294 16,120,903

Formal Proceedings

Intragovernmental Costs 1,096,851 1,021,862

Public Costs 6,706,607 6,483,940

Total Program Costs 7,803,458 7,505,802

Less: Intragovernmental Earned Revenue (21,864) (29,030)

Net Program Costs 7,781,594 7,476,772

Office of Inspector General

Intragovernmental Costs 89,391 246,955

Public Costs 360,855 67,586

Total Program Costs 450,246 314,541

Net Program Costs 450,246 314,541

Office of Equal Employment Opportunity

Intragovernmental Costs 20,242 20,323

Public Costs 133,065 172,816

Total Program Costs 153,307 193,139

Net Program Costs 153,307 193,139

Total Intragovernmental Costs 4,933,535 5,082,793

Total Public Costs 21,797,074 19,051,592

Total Costs 26,730,609 24,134,385

Less: Total Intragovernmental Earned Revenue (62,168) (29,030)

Net Cost of Operations $ 26,668,441 $ 24,105,355
Financial Information

The accompanying notes are an integral part of these financial statements

57

NOTE 10- 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 fiscal years ended September 30, 2015 and 2014, imputed financing was as follows:

 2015 2014

Office of Personnel Management $ 1,138,628 $ 1,307,305

 Total Imputed Financing Sources $ 1,138,628 $ 1,307,305

NOTE 11- BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President’s budget that will include fiscal year 2015 actual budgetary execution information 

has not yet been published. The President’s budget is scheduled for publication in February 2016, 

and will be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2016 Budget of 

the United States Government, with the "Actual" column completed for 2014, has been reconciled 

to the Statement of Budgetary Resources, and there were no material differences.

NOTE 12- APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2015 and 2014 

consisted of the following:

 2015 2014

Direct Obligations, Category A $ 26,105,905 $ 24,765,296

Reimbursable Obligations, Category A 62,168 29,030

 Total Obligations Incurred $ 26,168,073 $ 24,794,326

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 13- UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the fiscal years ended September 30, 2015 and 2014, budgetary resources obligated for 

undelivered orders amounted to $ 2,865,271and $2,742,237, respectively.
Financial Information

The accompanying notes are an integral part of these financial statements

58

NOTE 14- CUSTODIAL ACTIVITY

FMC is an administrative agency, collecting funds for another entity or the General Fund. As a 

collecting entity, FMC measures and reports cash collections and refunds. These collections are 

reported as custodial activity 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 part of the custodial activity is for the application on licenses issued to 

qualified Ocean Transportation Intermediaries (OTIs) in the U.S., commission reviews, petitions, 

status changes, and special permission fees. 

Custodial receipts are broken out in the general receipt funds:

 2015 2014

 Fines, Penalties, and Forfeitures $ 2,052,514 $ 2,968,000

 General Fund Proprietary Receipts (user fees) 253,476 220,549

 Refund of user fees (6,188) (2,825)

 Total Custodial Collections $ 2,299,802 $ 3,185,724

NOTE 15- 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.

2015 2014

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations Incurred

Spending Authority from Offsetting Collections and Recoveries

$ 26,168,073 

(580,957)

$ 24,794,326

(297,987)

Offsetting Receipts (248,451) (220,316)

Net Obligations 25,338,665 24,276,023

Other Resources

Imputed Financing from Costs Absorbed by Others 1,138,628 1,307,305

Net Other Resources Used to Finance Activities 1,138,628 1,307,305

Total Resources Used to Finance Activities

 Resources Used to Finance Items Not Part of the Net Cost of 

 Operations

26,477,293

42,414

 25,583,328

 (1,560,406)

Total Resources Used to Finance the Net Cost of Operations 26,519,707 24,022,922

 Components of Net Cost of Operations that will not Require or 

 Generate Resources in the Current Period 148,734 82,433

Net Cost of Operations $ 26,668,441 $ 24,105,355
Financial Information

59

APPENDIX A

FEDERAL MARITIME COMMISSION 

COMMENTS ON

DRAFT AUDIT REPORT
Financial Information

60

Sincerely,

/s/

Vern W. Hill

Chief Financial Officer

 

Federal Maritime 

Commission

800 North Capitol Street, N.W. 

Washington, D.C. 20573-0001 

 

 

Office of the 

Managing Director

 Phone: (202) 523-5800 

Fax: (202) 523-3646 

E-mail: omd@fmc.gov
Financial Information

61

APPENDIX B

FEDERAL MARITIME COMMISSION 

FINANCIAL STATEMENTS

FOR THE YEARS ENDED 

SEPTEMBER 30, 2015 and 2014
Financial Information

62
Financial Information

63
Financial Information

64
Financial Information

65
Financial Information

66
Financial Information

67
Financial Information

68

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 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 (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-vesseloperating 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 Commission 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-
Financial Information

69

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 yearend. The FMC has rights and ownership of all 

assets reported 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 guidelines regulate the disposal 

and convertibility of agency property, 

equipment, and software. The useful life 

classifications for capitalized assets are as 

follows:
Financial Information

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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 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 effective at 50% for the 1st quarter of 

FY 2014 and 100% thereafter.

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 onthe-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 
Financial Information

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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.

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.

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 post-retirement 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 2015 and 2014 to the extent directed by 

accounting standards. 

O. Contingencies
Financial Information

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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. 

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.

P. Reclassification

Certain fiscal year 2014 balances have been 

reclassified, re-titled, or combined with other 

financial statement line items for consistency 

with the current year presentation.

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2015, and 2014 were as follows:

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 13).

2015 2014

Fund Balances:

Appropriated Funds $ 4,397,659 $ 4,105,128 

Total $ 4,397,659 $ 4,105,128 

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 17,625 $ 18,211 

 Unavailable 284,834 368,993 

Obligated Balance Not Yet Disbursed 4,095,200 3,717,924 

Total $ 4,397,659 $ 4,105,128 
Financial Information

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NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2015, and 2014, were as follows:

The accounts receivable is primarily made up of services provided to other Intragovernmental agencies. 

Historical experience has indicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2015 and 2014.

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2015

2015 2014

Intragovernmental

Accounts Receivable $ 14,540 $ - 

Total Intragovernmental Accounts Receivable $ 14,540 $ - 

2015 2014

With the Public

Miscellaneous Accounts Receivable $ 5,141 $ 1,389 

Interest Receivable 21 - 

Penalties and Fines Receivable 285 131 

Total Public Accounts Receivable $ 5,447 $ 1,520 

Total Accounts Receivable $ 19,987 $ 1,520 

Major Class 

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ - 

Furniture & Equipment 502,537 324,249 178,288 

Software-in-Development 230,024 - 230,024 

Total $ 957,561 $ 549,249 $ 408,312 
Financial Information

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Schedule of Property, Equipment, and Software as of September 30, 2014

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2015 and 2014 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. 

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.

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ - 

Furniture & Equipment 341,800 262,401 79,399 

Software-in-Development 325,307 - 325,307 

Total $ 892,107 $ 487,401 $ 404,706 

2015 2014

Unfunded Leave $ 1,197,058 $ 1,123,416 

Federal Employee and Veterans' Benefits - 787 

Custodial Liabilities 2,163 1,753 

Total Liabilities Not Covered by Budgetary Resources $ 1,199,221 $ 1,125,956 

Total Liabilities Covered by Budgetary Resources 1,244,470 975,689 

Total Liabilities $ 2,443,691 $ 2,101,645 
Financial Information

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NOTE 6. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2015 were as follows:

Other liabilities account balances as of September 30, 2014 were as follows:

Current Non Current Total

Intragovernmental

Payroll Taxes Payable $ 115,597 $ - $ 115,597 

 Custodial Liability 2,163 - 2,163 

Total Intragovernmental Other Liabilities $ 117,760 $ - $ 117,760 

With the Public

 Payroll Taxes Payable $ 15,136 $ - $ 15,136 

 Accrued Funded Payroll and Leave 576,397 - 576,397 

 Unfunded Leave 1,197,058 - 1,197,058 

Total Public Other Liabilities $ 1,788,591 $ - $ 1,788,591 

Current Non Current Total

Intragovernmental

Payroll Taxes Payable $ 84,279 $ - $ 84,279 

 Custodial Liability 1,753 - 1,753 

Total Intragovernmental Other Liabilities $ 86,032 $ - $ 86,032 

With the Public

 Payroll Taxes Payable $ 12,022 $ - $ 12,022 

 Accrued Funded Payroll and Leave 349,623 - 349,623 

 Unfunded Leave 1,123,416 - 1,123,416 

Total Public Other Liabilities $ 1,485,061 $ - $ 1,485,061 
Financial Information

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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 2015 and 

2014 were $3,277,725 and $3,433,323, respectively. The lease locations and terms are listed below:

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:

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 knowledge of one lawsuit/investigation from FY 

2014 where the amount of potential loss exceeds $48,000. The FMC has knowledge of one 

lawsuit/investigation from FY 2015 where the amount of potential loss exceeds $48,000. The Commission 

will be vigorously contesting both cases. 

Location Term Lease Expiration Date

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

Washington, DC 10 years 10/31/2022

Iselin, NJ 10 years 03/15/2024

Fiscal Year Totals

2016 $ 3,189,633 

2017 3,221,574 

2018 3,419,625 

2019 3,454,859 

2020 3,469,921 

Thereafter 7,330,851 

Total Future Minimum Payments $ 24,086,463 
Financial Information

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NOTE 9. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other federal 

government entities, and are in contrast to those with non-federal entities (the public). Such costs and 

revenue are summarized as follows:

2015 2014

Operational and Administrative

 Intragovernmental Costs $ 3,727,051 $ 3,793,654

 Public Costs 14,596,547 12,327,249

 Total Program Costs 18,323,598 16,120,903

 Less: Intragovernmental Earned Revenue (40,304) -

 Net Program Costs 18,283,294 16,120,903

Formal Proceedings

 Intragovernmental Costs 1,096,851 1,021,862

 Public Costs 6,706,607 6,483,940

 Total Program Costs 7,803,458 7,505,802

 Less: Intragovernmental Earned Revenue (21,864) (29,030)

 Net Program Costs 7,781,594 7,476,772

Office of Inspector General

 Intragovernmental Costs 89,391 246,955

 Public Costs 360,855 67,586

 Total Program Costs 450,246 314,541

 Net Program Costs 450,246 314,541

Office of Equal Employment Opportunity

 Intragovernmental Costs 20,242 20,323

 Public Costs 133,065 172,816

 Total Program Costs 153,307 193,139

 Net Program Costs 153,307 193,139

Total Intragovernmental costs 4,933,535 5,082,793

Total Public Costs 21,797,074 19,051,592

 Total Costs 26,730,609 24,134,385

Less: Total Intragovernmental Earned Revenue (62,168) (29,030)

Net Cost of Operations $ 26,668,441 $ 24,105,355
Financial Information

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NOTE 10. 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, 2015 and 2014 imputed financing was as follows:

NOTE 11. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE UNITED 

STATES GOVERNMENT

The President’s Budget that will include fiscal year 2015 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2016 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb/. The 2016 Budget of the United States 

Government, with the "Actual" column completed for 2014, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

NOTE 12. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2015 and 2014 consisted of 

the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 13. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the years ended September 30, 2015 and 2014, budgetary resources obligated for undelivered orders 

amounted to $2,865,271 and $2,742,237, respectively.

NOTE 14. 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 

2015 2014

Office of Personnel Management $ 1,138,628 $ 1,307,305 

Total Imputed Financing Sources $ 1,138,628 $ 1,307,305 

2015 2014

Direct Obligations, Category A $ 26,105,905 $ 24,765,296 

Reimbursable Obligations, Category A 62,168 29,030 

Total Obligations Incurred $ 26,168,073 $ 24,794,326 
Financial Information

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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, 2015 and 2014.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows:

NOTE 15. 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.

2015 2014

Custodial Collections:

 Fines, Penalties, and Forfeitures $ 2,052,514 $ 2,968,000

 General Fund Proprietary Receipts (User fees) 253,476 220,549

 Refunds of Proprietary Receipts (User fees) (6,188) (2,825)

Total Custodial Collections $ 2,299,802 $ 3,185,724

2015 2014

 Obligations Incurred $ 26,168,073 $ 24,794,326 

 Spending Authority from Offsetting Collections and Recoveries (580,957) (297,987)

 Offsetting Receipts (248,451) (220,316)

 Net Obligations 25,338,665 24,276,023 

 Imputed Financing from Costs Absorbed by Others 1,138,628 1,307,305 

 Net Other Resources Used to Finance Activities 1,138,628 1,307,305 

 26,477,293 25,583,328 

 42,414 (1,560,406)

 26,519,707 24,022,922 

Generate Resources in the Current Period 148,734 82,433 

 $ 26,668,441 $ 24,105,355 

 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 

Net Cost of Operations

 Components of Net Cost of Operations that will not Require or 
OTHER INFORMATION
Other Information

81

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 15, 2015

Office of Inspector General

TO: Chairman Cordero

Commissioner Lidinsky 

Commissioner Doyle 

Commissioner Dye 

Commissioner Khouri 

FROM: Inspector General 

SUBJECT: Inspector General’s Statement on the Federal Maritime Commission’s 

Management and Performance Challenges 

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 on 

Commission challenges to be included in the Federal Maritime Commission’s (FMC) 

Performance and Accountability Report (PAR) [or Agency Financial Report (AFR)] for fiscal year 

(FY) 2015. 

This year, the Office of Inspector General (OIG) has identified two management and 

performance challenges for inclusion in the FMC’s FY 2015 PAR: information technology 

security and workplace satisfaction. These assessments are based on information derived from 

a combination of sources, including OIG audit and inspection work, Commission 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 PAR / AFR that is due by November 16, 2015. 

 /s/

Jon Hatfield

Attachment

Cc: Vern Hill, Managing Director
Other Information

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Office of Inspector General

Fiscal Year 2015 Management Challenges

1. The Management Challenge: Information Technology Security

Information technology (IT) security is a challenge the Federal Maritime Commission 

(FMC) shares with other Federal government departments and agencies due to the evolving and 

growing threats to government information systems. Risks to information and communication 

systems include insider threats from disaffected or careless employees and business partners; 

escalating and emerging threats from around the globe; the ease of obtaining and using hacking 

tools; the steady advance in the sophistication of attack technology; and the emergence of new 

and more destructive attacks.

Since 1997, the Government Accountability Office (GAO) has designated Federal 

information security as a government-wide high-risk area, and in 2003, expanded this area to 

include computerized systems supporting the nation’s critical infrastructure. In GAO’s 2015 highrisk update, GAO further expanded this area to include protecting the privacy of personal 

information that is collected, maintained, and shared by both Federal and non-Federal entities. 

In a GAO report on Federal information security dated September 29, 20155, GAO recognizes 

how the widespread use of the Internet has changed the way that our government, our nation, 

and the rest of the world communicates and conducts business. GAO further acknowledges that 

the benefits of the Internet have been enormous, but the connectivity of the Internet, without 

effective cybersecurity, can also pose significant risks to computer systems and networks as well 

as to the critical operations and key infrastructures they support. 

Significant examples of the challenges faced by Federal agencies protecting information 

and communication systems are the cybersecurity incidents that were reported in 2015 by the 

Office of Personnel Management (OPM). OPM is the independent agency that manages the civil 

service of the Federal government, to include providing Federal investigative services for 

background checks. Early in 2015, OPM first reported the discovery that the personnel data, such 

as full name, birth date, home address and social security numbers, of 4.2 million current and 

former Federal government employees had been stolen through a cybersecurity incident. In 

June 2015, OPM also discovered that the background investigation records of current, former, 

and prospective Federal employees and contractors had been stolen through a cybersecurity 

incident. Specifically, OPM and an interagency incident response team concluded with high 

confidence that sensitive information, including social security numbers, of 21.5 million 

individuals was stolen from the OPM background investigation databases. The frequency and 

5 U.S. Government Accountability Office, Federal Information Security, Agencies Need to Correct Weaknesses and 

Fully Implement Security Programs, GAO-15-714 (Washington, DC, 2015),, 

http://www.gao.gov/assets/680/672801.pdf.
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increased sophistication of cyber threats underscores the need to manage and bolster the 

security of Federal information systems.

Agency Progress in Addressing the Challenge:

The Federal Information Security Management Act of 2002 (FISMA) established 

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 annually to the Office of Management and Budget, selected congressional committees, 

the Comptroller General and the FMC’s Commission. 

Overall, the FMC is demonstrating a commitment to maintain an effective information 

security program. In the OIG’s Evaluation of the FMC’s Compliance with the Federal Information 

Security Management Act (FISMA) FY 2014, the OIG found the FMC had effectively implemented 

eight of the 12 outstanding prior year FISMA recommendations. Further, the FY 2014 FISMA 

evaluation contained five recommendations to address three findings, and the agency agreed to 

implement all of the OIG’s recommendations. The OIG is nearing completion of the FY 2015 

FISMA evaluation and the preliminary results indicate continued progress is being made by the 

agency to address security weaknesses; the final report is expected to be issued in November 

2015. 

The OIG believes the positive results of recent OIG FISMA evaluations can be attributed, 

at least in part, to FMC leadership accountability, and an effective working relationship between 

the agency’s information security team and the OIG. First, as evidenced during the OIG’s 

interactions with agency staff involved in information security, the FMC Chairman demonstrates 

a high-level of accountability for his management team. The OIG believes the Chairman’s 

leadership and holding management officials accountable are critical elements contributing to 

positive results with information security. In addition, the effective working relationship 

between the agency’s information security team and the OIG help ensure that everyone involved 

is working towards a common goal, to ensure an effective information security program for the 

agency. Although the OIG’s work does identify problems, agency officials responsible for 

information security are responsive, cooperative and dedicated in their work to address these 

problems. 

The Challenge Ahead:

The 2015 OPM cybersecurity incidents highlight that continued advancements in 

computer and communication technologies will likely result in ongoing challenges protecting 

Federal systems. In GAO’s September 2015 report on Federal Information Security (GAO-15-

714), GAO reported the number of information security incidents affecting systems supporting 

the Federal government has continued to increase: since fiscal year 2006, the number rose from 
Other Information

84

5,503 to 67,168 in FY 2014, an increase of 1,121 percent. These incidents included unauthorized 

access to systems; improper use of computing resources; and the installation of malicious 

software, among others. 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. 

2. The Management Challenge: Workplace Satisfaction

The OIG identified workplace satisfaction at the FMC as a management challenge for the 

first time in 2013, and again in 2014, due to low survey results as reported by the Office of 

Personnel Management (OPM) in their annual Federal Employee Viewpoint Survey (FEVS). 

OPM’s 2015 FEVS results indicate some meaningful improvements in the FMC’s workplace 

satisfaction and employee engagement, but continued improvements are needed.

Workforce satisfaction, or employee engagement, is defined as an employee’s sense of 

purpose: this is evident in their display of dedication, persistence, and effort in their work or 

overall commitment to their organization and its mission. OPM conducts the annual FEVS to 

provide government employees, including the FMC, the opportunity to candidly, and 

anonymously, share their perceptions of their work experiences, their agency, and their leaders. 

An engaged and satisfied workforce is central to effectively achieving agency goals, retaining 

staff, and recruitment of new staff. 

In December 2012, the Partnership for Public Service (PPS), a nonprofit organization that 

works to revitalize the Federal government, released its rankings for the Best Places to Work in 

the Federal Government. The December 2012 report ranked the FMC the second lowest of small 

agencies; the FMC ranked the third lowest of small agencies in both the 2013 and 2014 rankings. 

The PPS uses data from the OPM’s FEVS to rank agencies according to a Best Places to Work index 

score. OPM surveys agency employees and then the agencies are measured on overall employee 

satisfaction, as well as 10 workplace categories, such as effective leadership, employee 

skills/mission match, pay, teamwork and work/life balance. 

Due to the low FEVS results, the OIG completed an independent evaluation of the FMC’s 

workplace environment in March 2015. The goal of the evaluation was to validate the FEVS 

results, receive additional or updated feedback from employees, identify areas of agreement and 

disagreement and provide specific ideas for improving the workplace. 

Overall, the OIG evaluation found the major cause of disengagement was in the area of 

effective leadership. Within this area, three main themes were uncovered: (1) leadership legacy

- challenges with previous leaders remain top-of-mind at the agency and continue to impact 

morale; (2) low levels of trust - management and staff exhibit signs of distrust and a fear of 

retribution for speaking up or being perceived as out of favor; and (3) poor communication -

information is not widely or effectively shared across the agency, which results in rumors and 

misinformation. During the OIG evaluation process, it was found that the FMC has been taking 
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positives steps to improve low employee satisfaction and commitment scores. In particular, 

employees pointed to several areas as organizational strengths: (1) positive actions taken to 

address low leadership scores; (2) transparency in the hiring and promotion process; (3) expertise 

and talent among staff; and (4) a small agency culture and environment. To address the 

weaknesses, and build upon the workplace strengths, the OIG provided several 

recommendations to the agency, centered on the implementation of a robust action planning 

process, to focus on high impact and achievable action items. The agency agreed to implement 

all of the recommendations. 

Agency Progress in Addressing the Challenge:

The FMC made progress in 2015 to address the challenge of employee satisfaction and 

employee engagement. This progress is reflected through improved results in OPM’s 2015 FEVS 

and the agency’s progress implementing the recommendations from the OIG’s March 2015 

evaluation of the FMC’s workplace environment. 

The 2015 FEVS was administered by OPM from May 4, 2015, through June 12, 2015. The 

survey was anonymous, web based, and offered to all permanent FMC employees on board as of 

October 31, 2014. Of the 98 employees surveyed, 77, or 78%, chose to participate. Answers to 

the survey questions enable the FMC to develop effective strategies and tools for driving 

continuous improvement in the workplace. 

Among the notable OPM 2015 FEVS results for the FMC are a 14% increase in the global 

satisfaction index, the fourth largest increase among small agencies. On average, governmentwide, the global satisfaction index increased by one percentage point from 2014. The global 

satisfaction index measures employee satisfaction about four aspects related to their work: their 

job, their pay, their organization, and whether they would recommend their organization as a 

good place to work. 

The FMC also increased the FEVS engagement index by eight percent as compared to 

2014; this is the fifth largest percent increase among small agencies. On average, governmentwide, the engagement index increased by one percentage point from 2014. The engagement 

index is a measure of the employee’s sense of purpose, the display of dedication, persistence, 

and effort in their work or overall commitment to their organization and its mission. The index 

is comprised of numerous FEVS questions in the following sub-factors: leaders lead - reflects the 

employees’ perceptions of the integrity of leadership, as well as leadership behaviors such as 

communication and workforce motivation; supervisors - reflects the interpersonal relationship 

between worker and supervisor, including trust, respect, and support; and intrinsic work 

experience - reflects the employees’ feelings of motivation and competency relating to their role 

in the workplace. 

In addition to the improvements reported in the 2015 FEVS results, the agency made 

considerable progress implementing the recommendations contained in the OIG’s March 2015 

evaluation of the FMC workplace. Specifically, the agency updated the FMC-wide action plan to 
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focus on high impact and achievable action items in the workplace. The improved action plan 

added important elements, to include detailed action items, key deliverables, a timeline, 

responsible parties, resources needed and metrics for evaluating progress. The action plan was 

communicated in several ways to all employees, through email, meetings, and posted on the 

agency’s intranet. Several initiatives for fiscal year 2015 were included in the new action plan, 

to include an updated telework program, diversity training, the appraisal process, and a refresh 

to the agency’s employee suggestion program. As one example, the employee suggestion 

program is made up of a cross section of employees from the agency who volunteered to serve 

a six month term. The plan is for this team to meet monthly, review employee suggestions and 

make recommendations to the agency’s senior leaders. In addition, the Chairman, in his capacity 

as executive champion of the workplace improvement efforts, instituted regular meetings with 

the senior leaders to review progress and plan for next steps in the workplace improvement 

efforts. 

The Challenge Ahead:

The agency’s actions and results in fiscal year 2015 demonstrate a strong commitment to 

improve the FMC workplace. While there is much work still to do, the agency has put in place an 

effective action planning process, and beneficial communication and feedback mechanisms. 

Most importantly, the agency must ensure the efforts being made are resulting in real change for 

the employees, and continuous feedback at all levels is critical to ascertain the pulse of the 

workforce.
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Comments on IG-Identified Management and Performance 

Challenges

The FMC appreciates the work of its Inspector General in reviewing the agency’s actions and 

compliance with Federal laws and mandates. The role of the Inspector General is important 

government-wide to ensure accountability to the U.S. public. The Commission agrees with the FMC’s

Inspector General on its identified Management and Performance Challenges and commits itself to 

continuing efforts to meet these challenges with planning, attention, and diligence. A response to 

each challenge is outlined below:

1. Information Technology Security

Management agrees that it is critical for this agency to continue to prioritize information 

technology security controls and risk-based enhancements, especially in view of the many 

highly-publicized recent incidents and data breaches at other Federal agencies. In recent fiscal 

years, the Commission has responded quickly to identify critical vulnerabilities, mitigate risk 

and strengthen our cybersecurity readiness with upgrades to our information technology 

infrastructure. However, the Commission’s limited resources hinder its ability to stay ahead 

of the latest cybersecurity threats. Strategic planning and partnering with other Federal 

agencies to protect our information technology infrastructure is essential. The FMC is a 

participant in the General Services Administration and Department of Homeland Security’s 

Continuous Diagnostics and Mitigation and Continuous Monitoring as a Service programs, 

which will enable the agency to implement tools and services to strengthen the security posture 

of our information technology network.

2. Workplace Satisfaction

Management agrees that, although much has been accomplished, efforts must and will

continue to be made to improve the FMC workplace. The results of the FEVS discussed by 

the IG are encouraging, but the Commission remains focused on continued improvement. 

Workplace satisfaction and employee engagement remain mission-critical priorities at the 

FMC. 

In FY 2015, the Commission made strides and implemented actions and initiatives that 

demonstrate the leadership’s commitment to workplace satisfaction and employee 

engagement. The FMC’s Statement of Principles was updated and published on August 31, 

2015, and is on display in FMC offices. The FMC’s Workplace Improvement Plan was 

updated, and provided to all employees by the Chairman. 

Employees were encouraged to collaborate in several improvement initiatives by participating 

in working groups, and information is available to staff in their respective charter plans on the 

FMC intranet, and include:

(1) Diversity Training: will be provided annually to SES and Managers (completed 

for FY2015). A diversity training working group was formed and is in progress;
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(2) Appraisal Process: A working group was formed with employee participation, and 

training for supervisors and staff was provided in June and July, 2015. An After 

Actions Report was made to supervisors and managers in July 2015, and to employees 

in September 2015;

(3) Telework: A Cross-Bureau/Office employee working group was established to 

examine and modernize the Commission’s telework policy and update Commission 

Order 71. Training for all employees was provided in July 2015. The new policy is 

effective in October 2016; 

(4) Employee Suggestion Program: A working group was formed to refresh and 

modernize the employee suggestion program. Early in FY 2016, the working group 

will present suggestions to the SES. It is anticipated that employee recognition for 

adopted employee suggestions will be completed by the end of calendar year 2015; and 

(5) Social Interaction: A social events program working group was formed. Various 

social events were held throughout FY 2015, and several are planned for FY 2016. 

The Chairman, in his capacity as executive champion, together with the SES, continue to hold 

regular (monthly/bimonthly) meetings to review progress and implement next steps. The 

Chairman and SES completed identified FY2015 actions by the end of the fiscal year, and with 

staff input and discussion, are now identifying FY2016 actions. All actions are being 

communicated via all-hands meetings, and inter- and intra-Bureau/Office meetings are 

ongoing. 
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Improper Payments Information Act

Narrative Summary of Implementation Efforts for FY 2015

I. 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 of its 

payments to fall within the realm of low risk. As such, the FMC has instituted a separation of 

duties concerning payments that has been very successful in curtailing any improper payments. 

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 2015, the FMC had no overpayments. The FMC did not identify any improper collections 

through the Intergovernmental Payments and Collections (IPAC). 

II. The FMC used a statistical sample conducted by BFS to determine its improper payment rate. 

III. The FMC will continue to monitor payments to maintain a zero dollar improper payment 

figure. To this end, the FMC will ensure that there is sufficient segregation of duties pertaining 

to payments concomitantly with closer 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.

IV. The table below represents the improper payments made by the FMC in FY 2015 with 

percentage forecasts through FY 2018. 

Improper Payments Information Act Reduction Outlook FY 2015 - 2018

(millions)

 Program FY 15

Outlays

FY15

IP %

FY15

IP $

FY16

%

FY17

%

FY18

%

 Formal Proceedings $0.00 0.00 $0.00 0.00 0.00 0.00

 Inspector General $0.00 0.00 $0.00 0.00 0.00 0.00

 Equal Employment 

Opportunity $0.00 0.00 $0.00 0.00 0.00 0.00

 Operational and 

Administrative $0.00 0.00 $0.00 0.00 0.00 0.00

Totals $0.00 0.00 $0.00 0.00 0.00 0.00

V. 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 via electronic media 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)
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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 the payment 

authorization has been processed by OBF, 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.

VI. The Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible for 

the efficient and effective utilization of the spending authority granted the agency by Congress. 

The Chairman has delegated administrative funds control to the Director, OBF. The Director 

of 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.

VII. 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 2015, 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.

VIII. There are no statutory or regulatory barriers that limit the agency’s ability to take corrective 

actions to address any improper payments.

Summary of Financial Statement Audit

Summary of Financial Statement Audit

Audit opinion Unmodified

Restatement No

Material Weakness Beginning 

Balance New Resolved Consolidated Ending Balance

None 0 0 0 0 0