Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

October 1, 2015 – March 31, 2016 

FEDERAL MARITIME COMMISSION
 
 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

April 28, 2016 

Office of Inspector General 

Dear Chairman Cordero and Commissioners Dye, Lidinsky, Khouri, and Doyle: 

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

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

(OIG) for the period October 1, 2015 to March 31, 2016. 

During part of this reporting period, the OIG was pleased to welcome auditor intern Mr. 

Dan Aylestock, an accounting student from George Mason University. Mr. Aylestock assisted the 

OIG prepare a risk-based audit plan, a project that involved interviews of agency officials, 

research, and the development of an electronic data collection tool. The OIG expects the project 

to be completed in the summer of 2016. 

During the reporting period, one audit, an evaluation, and an audit peer review of the office 

were completed. On November 10, 2015, the OIG issued the Independent Auditors’ Report of the 

FMC’s Fiscal Year 2015 Financial Statements. In addition, on November 12, 2015, the OIG 

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

Management Act (FISMA) Fiscal Year 2015. Lastly, the U.S. International Trade Commission 

OIG completed an audit peer review of the FMC OIG and issued a report with a pass rating. These 

assignments are all discussed in more detail in the attached report. 

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

leadership and staff. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

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Table of Contents

Transmittal Letter
 

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

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

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

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

Completed Audit and Evaluation .............................................................................................................................. 3
 

Hotline and Investigations........................................................................................................................................ 5
 

OTHER ACTIVITIES .....................................................................................................................................6
 

OIG Follow‐Up........................................................................................................................................................... 6
 

Purchase Card Risk Assessment................................................................................................................................ 6
 

Peer Review .............................................................................................................................................................. 7
 

Memorandum of Understanding.............................................................................................................................. 7
 

Review of Legislation ................................................................................................................................................ 7
 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities...................................................... 8
 

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS.............................................................9
 

TABLE I ‐ Summary of Reports with Corrective Actions Outstanding for More than 6 Months................10
 

TABLE II ‐ Listing of Reports Issued.........................................................................................................10
 

TABLE III ‐ Reports with Questioned Costs .............................................................................................11
 

TABLE IV  ‐ Recommendations that Funds be Put to Better Use ..............................................................12
 

Appendix A ‐ Peer Review Activity .........................................................................................................13
 
	 	

 

 

	 	

 


 


	

EXECUTIVE SUMMARY
 

This semiannual report summarizes the activities and accomplishments of the Federal 

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

reporting period October 1, 2015 through March 31, 2016. The most significant activities of the 

OIG during the first half of fiscal year (FY) 2016 are summarized below and additional details can 

be found in subsequent sections of this report. 

During this reporting period, the OIG issued the Independent Auditors’ Report of the FMC’s 

FY 2015 Financial Statements (A16-01) and the report on the Evaluation of the FMC’s Compliance 

with the Federal Information Security Management Act FY 2015 (A16-02). The OIG also completed 

a risk assessment of the FMC’s purchase card program. In addition, an external peer review of the 

audit office was completed during the period by the U.S. International Trade Commission OIG and 

a pass rating was issued. 

During the period, the OIG received one new hotline complaint and closed two hotline 

complaints. There were no new investigations or matters referred to prosecutorial authorities during 

this period. At the end of this reporting period, four hotline complaints were pending and there were 

no investigations open. 

FEDERAL MARITIME COMMISSION

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

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

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

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

of the Merchant Marine Act of 1920. 

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

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

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

Orleans, Houston, and South Florida through Area Representatives. These Area Representatives 

serve the major ports and transportation centers within their respective geographic areas, and provide 

information, liaison and investigatory services on behalf of the FMC. 

Pictured: Port of New Orleans, New Orleans, Louisiana

Credit: Port of New Orleans.

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OFFICE OF INSPECTOR GENERAL

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

app.). The OIG is an independent audit and investigative unit headed by an IG who reports to the 

FMC Commissioners and Congress. To aid the FMC in accomplishing its mission, the OIG is 

provided two full-time positions, the Inspector General and an auditor. During this reporting period, 

the OIG’s one auditor position was vacant. However, in 2015, the OIG entered into a six-month 

agreement with the Environmental Protection Agency (EPA) OIG to have a Senior Auditor detailed 

to this office; this auditor detail ended in early December 2015. The OIG had one part-time auditor 

intern during the spring of 2016, and is expecting two full-time auditor interns in the summer 2016. 

The OIG has a memorandum of understanding (MOU) in place with the Federal Election 

Commission (FEC) OIG under which the FEC IG’s Counsel also serves as the FMC IG’s Counsel 

on a reimbursable basis. 

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

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

and abuse, and promoting economy, efficiency and effectiveness within the agency. The OIG 

investigations seek out facts related to allegations of wrongdoing on the part of FMC employees and 

individuals, or entities contracting with, or obtaining benefits from, the agency. The Inspector 

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

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

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

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

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

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

OIG. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Audit and Evaluation

Independent Auditors’ Report of the FMC’s FY 2015 Financial Statements, A16-01. This 

audit report was issued on November 10, 2015. The OIG contracted with Regis & Associates, PC 

to perform the audit and the OIG actively monitored and reviewed the work and results of the 

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contractor. The audit objectives were to opine on whether the FMC’s FY 2015 financial statements 

follow U.S. Generally Accepted Accounting Principles (GAAP) and present fairly the financial 

position of the agency. The auditors also reviewed internal controls over financial reporting and 

agency compliance with laws and regulations. The statements audited were the balance sheets as of 

September 30, 2015 and 2014, and the related statements of net cost, statements of changes in net 

position, statements of budgetary resources and statements of custodial activity. 

The independent auditor opined that the FMC’s financial statements were fairly presented, 

in all material respects, in conformity with GAAP; there were no material weaknesses in internal 

control over financial reporting (including safeguarding assets) and compliance with laws and 

regulations; and no reportable noncompliance with laws and regulations tested. Therefore, there 

were no findings or recommendations in the audit report. 

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

Act (FISMA) FY 2015, A16-02. This evaluation report was issued on November 12, 2015. The 

OIG contracted with Your Internal Controls, LLC to perform the evaluation and the OIG actively 

monitored and reviewed the work and results of the contractor. The objectives of this independent 

evaluation of the FMC’s information security program were to evaluate its security posture by 

assessing compliance with the FISMA and related information security policies, procedures, 

standards, and guidelines. 

The scope of the testing focused on the FMC General Support Systems (GSS) and Major 

Applications. Evaluation testing included inquiry of FMC personnel, observation of activities, 

inspection of relevant documentation, and the performance of technical security testing. More 

specifically, testing covered a sample of controls as listed in National Institute of Standards and 

Technology’s (NIST) 800-53, Recommended Security Controls for Federal Information Systems 

and Organizations, Revision 4. The FY 2015 report included six new recommendations to address 

five findings. 

Hotline and Investigations

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

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

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

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

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

During the period, the OIG received one new hotline complaint and closed two hotline 

complaints. There were no new investigations or matters referred to prosecutorial authorities during 

this period. At the end of this reporting period, four hotline complaints were pending and there were 

no investigations open. 

OTHER ACTIVITIES

OIG Follow‐Up

The OIG’s follow-up on prior OIG recommendations resulted in the closure of three 

recommendations from the Audit of Expenditures for Furnishing or Redecorating Commissioners’ 

Offices, A15-05. Specifically, the agency strengthened internal controls to include improved record 

keeping, policies, and reporting to the Commissioners on their respective expenditures for furnishing 

or redecorating their offices. As a result, all five of the recommendations from this audit have been 

implemented by the agency and are closed. 

Follow-up for the OIG’s Evaluation of the FMC’s Compliance with the Federal Information 

Security Management Act (FISMA) FY 2015, A16-02 revealed the agency continues to make 

progress addressing open FISMA recommendations. Specifically, the OIG follow-up resulted in the 

closure of five OIG recommendations. The agency addressed deficiencies in the backup of computer 

data, encryption of mobile computers, contingency planning, among others. 

Purchase Card Risk Assessment

In accordance with the Government Charge Card Abuse Prevention Act of 2012 (Charge 

Card Act), the OIG completed the annual risk assessment of the FMC’s purchase card program. The 

objective was to assess the risk of illegal, improper, and erroneous use of the purchase card program 

to determine the scope, frequency, and number of future audits and reviews to be conducted by the 

OIG. To conduct the risk assessment, the OIG reviewed purchase card data; program 

documentation; policies and procedures; and interviewed program officials for the purchase card 

program. The OIG assessed the risk of illegal, improper, or erroneous use in the FMC’s purchase 

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card program is “low,” based on a scale from very low, to very high. In addition, several 

administrative suggestions were made to FMC management for improvement of the program. 

Peer Review

Federal OIGs are required by the IG Act to have an audit peer review performed once every 

three years. These reviews are to be performed only by Federal auditors. A committee of the 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) schedules the review to 

ensure that resources are available to perform the review and that OIGs do not conduct reciprocal 

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

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

applicable government auditing standards are being followed. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (P.L. 111-203), 

requires Federal OIGs to include in their semiannual reports to Congress an appendix containing the 

results of any peer review conducted by another OIG during the reporting period, or, if no peer 

review was conducted within that reporting period, a statement identifying the date of the last peer 

review conducted by another OIG. An external peer review of the audit office was completed during 

the period by the U.S. International Trade Commission OIG and a pass rating was issued. Please 

see appendix A for additional information. 

Memorandum of Understanding

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

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

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

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

(MOU) with the Federal Election Commission OIG under which the FEC IG’s Counsel also serves 

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

Review of Legislation

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

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

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

and (2) contains adequate internal controls to prevent and detect fraud, waste, and abuse. 

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

The CIGIE was established by law as an independent entity by the Inspector General Reform 

Act of 2008 (P.L. 110-409) to: 

 address integrity, economy and effectiveness issues that transcend individual government 

agencies; and 

 increase the professionalism and effectiveness of personnel by developing policies, 

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

workforce in the Office of Inspectors General. 

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

confirmed and those that are appointed by agency heads. The FMC OIG remains active in CIGIE 

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

monthly CIGIE meetings and periodically assists CIGIE on special projects. 

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

Investigations Committees. The Audit Committee is responsible for coordinating government-wide 

activities that promote economy and efficiency in Federal programs and operations, and to address 

areas of weakness and vulnerability with respect to fraud, waste, abuse, and mismanagement. The 

Audit Committee serves as a resource for the Federal audit community, maintains professional audit 

standards, and develops auditor training requirements. The mission of the Investigations Committee 

is to advise the IG community on issues involving investigations, investigative personnel, and 

establishing investigative guidelines. Both the Audit and Investigations Committees generally meet 

on a bi-monthly basis, or more frequently as necessary. 

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SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS
 

IG Act Reference Reporting Requirement Pages 

Section 4(a)(2) Review of legislation and regulations 7 

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

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

problems, abuses, or deficiencies 

None 

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

corrective actions have not been completed 

10 

Section 5(a)(4) Matters referred to prosecutive authorities None 

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

refused 

None 

Section 5(a)(6) List of reports by subject matter 10 

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

Section 5(a)(8) Reports with questioned costs None 

Section 5(a)(9) Recommendations that funds be put to better use None 

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

period for which no management decision was made 

by the end of the reporting period 

None 

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

management decisions 

None 

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

inspector general disagrees 

None 

Section 5(a)(13) Information under Section 5(b) of the Federal 

Management Improvement Act (FFMIA) of 1996 

None 

Section 5(a)(14)(15) Peer review activity on FMC OIG 13, App. A 

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

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

than 6 Months

Recommendations 

Report Title Report 

Number 

Issue 

Date Number Open Closed 

Workplace Evaluation 

Report 

A15-04 03/10/15 6 3 3 

FY 2015 Implementation 

of FISMA 

A16-02 11/12/15 12 3 9 

Review of FMC’s User 

Fee Calculations 

OR10-03 5/27/10 1 1 0 

TABLE II ‐		Listing of Reports Issued

Report Title Report Issue Questioned Unsupported Funds Put to 

Number Date Costs Costs Better Use 

Independent Auditors’ Report A16-01 11/10/15 $0 $0 $0 

of FMC’s FY 2015 Financial 

Statements 

Evaluation of FMC’s A16-02 11/12/15 $0 $0 $0 

Compliance with the Federal 

Information Security 

Management Act (FISMA) FY 

2015 

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TABLE III ‐		Reports with Questioned Costs

Number 

of 

Reports 

Questioned 

Costs 

Unsupported 

Costs 

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0 

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

Subtotal (A + B) 0 $0 $0 

C. For which a management decision was made 

during the reporting period. 

0 $0 $0 

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

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

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0 

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0 

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TABLE IV ‐		Recommendations that Funds be Put to Better Use

Number 

of 

Reports Dollar Value 

A. For which no management decision has been made 

by the commencement of the reporting period. 0 $0 

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

Subtotal (A + B) 0 $0 

C. For which a management decision was made during 

the reporting period. 0 $0 

 (i) dollar value of recommendations that were 

agreed to by management; and 

0 $0 

 (ii) dollar value of recommendations that were not 

agreed to by management. 

0 $0 

D. For which no management decision has been made 

by the end of the reporting period. 0 $0 

E. Reports for which no management decision was 

made within six months of issuance. 0 $0 

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Appendix A ‐		Peer Review Activity

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

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

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

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

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

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

The U.S. International Trade Commission (USITC) OIG conducted an audit peer review of 

the FMC OIG in the current reporting period. The USITC OIG concluded the system of quality 

control for the FMC OIG’s audit organization was suitably designed and complied with to provide 

FMC OIG with reasonable assurance of performing and reporting in conformity with applicable 

professional standards. A final system review report was issued to the FMC OIG on March 24, 

2016; this office received a pass rating. There were no weaknesses or recommendations identified 

in the system review report. 

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HOTLINE COMPLAINTS 

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

depends on the cooperation of FMC employees and the public. 

Employees and the public are encouraged to contact the OIG regarding

any incidents of possible waste, fraud or abuse occurring within FMC

programs and operations.

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

(202) 523‐5865

ONLINE COMPLAINT FORM:

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO:

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

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

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR

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

ADDITIONAL INFORMATION.