FEDERAL MARITIME

COMMISSION An independent agency of the U.S. Government 

Chairman Michael A. Khouri

November 2020
Members of the Commission

 Chairman Michael A. Khouri

 Appointed 2009

 Term Expires 2021

 Commissioner Daniel B. Maffei Commissioner Rebecca F. Dye

Appointed 2016 Appointed 2002

Term Expires 2022 Term Expired 2020

 

 Commissioner Louis E. Sola Commissioner Carl Bentzel

 Appointed 2019 Appointed 2019

 Term Expires 2023 Term Expires 2024
FMC FISCAL YEAR 2020 | Performance and Accountability Report | iii

CONTENTS 

Contents iii

MESSAGE FROM CHAIRMAN KHOURI iv

PART ONE: MANAGEMENT’S DISCUSSION and ANALYSIS 1

Overview of the Commission ...................................................................................................... 2

Regulatory Responsibility and Oversight.................................................................................... 7

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

Financial Statement Highlights.................................................................................................. 16

Analysis of Systems, Controls, and Legal Compliance............................................................... 19

Chairman Khouri’s Statement of Assurance ............................................................................. 22

PART TWO: ANNUAL PERFORMANCE REPORT 23

Annual Performance Report...................................................................................................... 24

PART THREE: FINANCIAL INFORMATION 28

Message from the Chief Financial Officer / Managing Director............................................... 29

Principal Financial Statements.................................................................................................. 30

Independent Auditors' Report.................................................................................................. 34

PART FOUR: OTHER INFORMATION 59

Inspector General’s Statement on Management and Performance Challenges...................... 60

Comments on Inspector General’s Statement 63

Financial Statement Audit Summary......................................................................................... 64

Management Assurances Summary.......................................................................................... 64

Improper Payments Information Act........................................................................................ 65

Fraud Reduction Report............................................................................................................ 68

Civil Monetary Penalty Adjustment for Inflation...................................................................... 70

Biennial Review of User Fees.................................................................................................... 70

This Report can be downloaded at https://www.fmc.gov/about-the-fmc/performance-andaccountability-reports/
FMC FISCAL YEAR 2020 | Performance and Accountability Report | iv

MESSAGE FROM CHAIRMAN KHOURI

Federal Maritime Commission

Washington, D.C. 20573-0001

Office of the Chairman

November 16, 2020

I am pleased to present the Fiscal Year 2020 Performance and Accountability Report (Report or 

PAR) for the Federal Maritime Commission. This report provides the results of this year’s 

independent audit of the Commission’s FY 2020 financial statements and measures actual 

performance against the Commission’s five-year Strategic Plan.

The FMC works to ensure a competitive and reliable international ocean transportation supply 

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

practices. International ocean shipping and the international supply chain are vital to our 

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

implementing and enforcing the Shipping Act of 1984 and other related maritime statutes, the 

FMC plays a vital role in strengthening American economic competitiveness through 

international shipping.

This report highlightsthe FMC’s achievements in accomplishing its mission and meeting its 

strategic goals. Furthermore, this report shows our commitment to proper operational 

oversight, with safeguards in place to protect the agency and the public from financial risks. 

We take pride that for the 17th consecutive year, the Commission's financial statements have 

earned an unmodified ("clean") opinion, and the annual assessment of internal controls over 

operations, systems, and financial reporting identified no material weaknesses. We remain 

committed to ensuring the Commission’stransparency and accountability to the American 

taxpayer. The performance and financial data contained in this report are reliable and 

complete.

The United States’ economy relies heavily on the services provided by the industries and 

companies the Commission oversees. I am proud of the FMC’s role in ensuring competition and 

integrity for America’s ocean supply chain.

Sincerely, 

/s/

Michael A. Khouri

Chairman
PART ONE: MANAGEMENT’S 

DISCUSSION AND ANALYSIS 

Fiscal Year 2020
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OVERVIEW OF THE COMMISSION

HISTORY

First constituted over 100 years ago as the U.S. Shipping Board in the Shipping Act of 1916, the 

Federal Maritime Commission (FMC or Commission) was authorized in its current form as an 

Executive Branch agency in 1961. The Commission is an independent, non-CFO Act agency that 

regulates the international ocean transportation supply system (vessel liner carriers, ocean 

transportation intermediaries, and marine terminal operators). From its beginning, the 

Commission has worked to further competition and integrity for America’s ocean supply chain. 

MISSION

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

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

deceptive practices.

The Commission achieves its mission by ensuring that the fundamental dynamics of a free, 

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

committed to faithfully administering the Shipping Act, employing a minimum of government 

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

THE FMC TODAY

Moving more than $1 trillion in U.S. exports and imports each year, international ocean 

shipping is a critical componentthat supports our Nation’s commerce. The industry continually

adjusts and reactsto challenging market conditions. Carriers and marine terminal operators 

(MTOs) strive to find ways to cut costs and realize greater efficiencies, whether individually or 

through consolidation, mergers, or operational cooperation with their competitors under 

agreements filed with the FMC. Carrier- and MTO-concerted activity and changes in market 

structure require the FMC to quickly analyze and respond to the competitive impact of 

proposed or existing carrier and MTO agreements to guard against possible anticompetitive 

abuse of the filed agreement authority; to detect and address unreasonable increases in 

transportation costs or decreases in transportation services; and to address other activities 

prohibited by the Shipping Act.

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

in part, by balancing cost-containment strategies and cooperative working arrangements 

among carriers or MTOs with the legitimate business needs of the Nation’s many 

exporters/importers to ensure their goods reach international markets efficiently and reliably. 

As the industry evolves and changes, the FMC will continue its focus upon competition and 

integrity for America’s ocean supply chain by:

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

• Assessing the competitive effects of agreement parties’ activities, particularly focusing 

on issues of costs (freight rates), vessel capacity (supply) and equipment availability 

upon the business community; 
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• Licensing our Nation’s non-vessel-operating common carriers (NVOCCs) and freight 

forwarders, (collectively ocean transportation intermediaries, or OTIs), registering 

foreign-based NVOCCs, and administering an effective surety bond program to ensure 

payment of judgments for damages by OTIs; and

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

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

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

STATUTORY AUTHORITY

The principal statutes administered by the Commission, codified at 46 U.S.C. §§ 40101-44106 

and § 3503, are:

• The Shipping Act of 1984, as amended (Shipping Act);

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

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

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

• Section 834 of the Frank LoBiondo Coast Guard Authorization Act of 2018 (LoBiondo Act).

ORGANIZATION 

The FMC is composed of five Commissioners nominated by the President and confirmed by the 

Senate, each serving a staggered five-year term. The Commission is a bipartisan body; no more 

than three members of the Commission may be of the same political party. One Commissioner, 

designated by the President, serves as the Chairman, Chief Executive, and Chief Administrative 

Officer of the Commission. 

The Commission’s staffis mainly comprised of economists, attorneys, and experts in ocean 

transportation, and is located at its Washington, D.C. headquarters. The Commissionalso

maintains a presence in six major port locations nationwide, staffed by Area Representatives

(ARs). In addition to the Commissioners’ offices, the FMC is organized into ten bureaus and 

offices: 

Bureau of Certification and Licensing (BCL) protects the public from financial harm 

through its OTI licensing, registration, and surety bonding programs. BCL also protects the 

public by requiring passenger vessel operators (PVOs) to maintain adequate financial 

coverage to reimburse cruise cancellations or to cover liability in the event of death or 

injury at sea. 

Bureau of Enforcement (BOE) is the prosecutorial arm of the Commission. Bureau 

attorneys serve as trial counsel in formal proceedings and protect the shipping public by 

working closely with the Commission’s ARsin investigations of potential violations of the 

Shipping Act and Commission regulations. BOE negotiates settlements and informal 

compromises of civil penalties and may act as investigative officers in formal fact-finding 

investigations.

Bureau of Trade Analysis (BTA) analyzes and monitors the concerted activities of vesseloperating common carriers (VOCCs or carriers) and MTOs to detect and guard against 
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 4

possible anticompetitive abuse of authority contained in filed agreements which could 

result in substantial increases in transportation costs or decreases in transportation 

services. BTA also reviews and analyzes service contracts, monitors rates of foreign, 

government-owned controlled carriers; and reviews carrier-published tariff systems under 

the accessibility and accuracy standards of the Shipping Act. 

Office of the Administrative Law Judges (OALJ) presides over administrative hearings and 

independently resolves cases involving alleged violations of the Shipping Act of 1984 

initiated by private parties or by the Commission. Through trial hearings and the issuance 

of decisions, the OALJ ensures that the rights of all parties are preserved.

Office of Consumer Affairs and Dispute Resolution Services (CADRS) provides assistance to 

shippers, OTIs, cruise operators and passengers, truckers, MTOs, and carriers by providing 

alternative dispute resolution (ADR) services, ombuds assistance, mediation, and 

facilitation to resolve disputes involving cargo shipments, household goods shipments, and 

cruises.

Office of Equal Employment Opportunity (OEEO) advises and assists the Commission in 

carrying out its responsibilities relative to Titles VI and VII of the Civil Rights Act of 1964 (as 

amended), other laws, executive orders, and regulatory guidelines implementing 

affirmative employment; and the processing of EEO complaints.

Office of the Inspector General (OIG) is an independent oversight office created within the 

FMC by the Inspector General Act of 1978 (as amended) to conduct and supervise audits, 

inspections, and investigations relating to the FMC’s programs; to detect and prevent 

waste, fraud, and abuse; to promote economy, efficiency, and effectiveness; to keep the 

Chairman, Commissioners, and Congress fully informed of serious problems and 

deficiencies and recommend corrective actions; and, as appropriate, to report violations of 

law to the U.S. Attorney General.

Office of the General Counsel (OGC) provides sound and timely legal services to the 

Commission and staff as it fulfills responsibilities, includingpreparing final decisions, 

orders, and regulations for Commission approval and issuance; representsthe Commission 

in litigation before the courts; providestechnical and policy assistance to other 

government agencies engaged in international negotiations or discussions on shipping 

matters; and provided legal opinions to the Commission, its staff, and the general public in 

appropriate instances. OGC also oversees the Commission’s international affairs activities. 

The General Counsel is the Commission’s Chief Legal Officer.

Office of the Managing Director (OMD) implementsthe administrative directives of the 

Chairman; the management and coordination of Commission program offices and bureaus; 

and oversees the agency’s ARs. OMD has direct oversight of the administrative offices of 

the Commission, which include the Offices of Budget and Finance (OBF), Human Resources

(OHR), Information Technology (OIT), and Management Services (OMS). The Managing 

Director is the FMC’s Chief Financial and Chief Operating Officer.

Office of the Secretary (OS) serves as the office through which all filings are made in 

Commission proceedings, notices of proceedings are given, and from which all official 
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 5

actions are issued by the Commission. OS prepares and maintains agenda matters and 

actions taken by the Commission; maintains official files and records of formal 

proceedings; ensures compliance with the Freedom of Information, Government in the 

Sunshine, and Privacy Acts; responds to information requests from the public; issues 

publications and authenticates instruments and documents of the Commission; maintains 

a public reference/law library and a docket library; and oversees the organization and 

content of the Commission’s website.
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Federal Maritime Commission

Organization Chart*

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

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

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

publication.
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 7

REGULATORY RESPONSIBILITY AND OVERSIGHT

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

• Reviewing and monitoring agreements among and between carriers and among and between 

MTOs serving the U.S. foreign oceanborne trades to ensure that they do not cause 

unreasonable increases in transportation costs or decreases in transportation services;

• Maintaining and reviewing confidentially filed service contracts to guard against detrimental 

effects to shipping;

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

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

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

systems and publicly available;

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

practices in U.S. foreign shipping trades; and

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

they are just and reasonable.

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

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

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

OTIs; 

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

damages by OTIs;

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

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

• Adjudicating private party complaints alleging Shipping Act violations; 

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

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

death or injury at sea; and

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

trades.

ALLIANCE, VESSEL SHARING, AND MARINE TERMINAL OPERATOR AGREEMENTS

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

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

equipment availability. Worldwide economic conditions continue to drive changes among ocean 

carriers and MTOs, resulting in more complex or novel agreements filed with the Commission.

FY 2020 saw a reduced number of agreement filings, likely as a result of the impact of the COVID-19 

pandemic on the global economy. We note, however, that carriers and marine terminal operators 

continue to explore novel areas for cooperation through agreement filings at the Commission. For 

example, the Commission analyzed the impact of cooperation in the adoption of blockchain 

technologies in the shipping industry under two separate agreements: The TradeLens Agreement and 

The Global Shipping Business Network Agreement.
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The Commission continues to review all agreements on file on an ongoing basis in an effort to identify 

obsolete and inactive agreements that remain on file at the Commission, and to ensure that all 

agreements are being appropriately monitored, given current competitive conditions in the ocean 

transportation industry. This also ensures that the library of agreements on file is an accurate 

representation of current areas of cooperation under the authority of the Shipping Act.

The Commission also evaluated new agreements under the provisions of the Frank LoBiondo Coast 

Guard Authorization Act, Pub. L. No. 115-282, regarding joint procurement by carriers of certain 

covered services. All current agreements that contain authorities that could allow joint purchasing of 

covered services have been identified and notified of the requirement that they inform the 

Commission of any such purchases. During FY 2021, the Commission intends to follow up with these 

agreements, as necessary, and refine the ways in which the LoBiondo Act should be applied to BTA’s 

agreement review process.

As the industry responds to trade conditions and economic developments, the FMC will continue to 

analyze agreements for anti-competitive behavior and address unreasonable practices as necessary.

LICENSING PROCESS

The Commission continuedto streamline its OTI licensing processes, resulting in a reduction in the 

time to process applications and render a decision, supporting the Commission’s goal of completing 

75 percent of all OTI license applications within 60 days. The Commission exceeded its 75 percent 

target, completing 85 percent of all OTI license applications within 60 days for the third year in a row. 

In Docket No. 18-11, the Commission proposed changes to the FMC’s requirements pertaining to 

ocean transportation intermediaries, involving adjustments to the application and renewal 

proceduresfor licenses and registrations, and changes to the form, type, and timing of information 

required to be submitted to the Commission. The Commission issued a final rule on November 15, 

2019, adopting all but one of the proposed changes.

In Docket No. 19-04, the Commission issued a final rule on January 31, 2020, modifying the hearing 

procedures governing the denial, revocation, or suspension of OTI licenses. The revised hearing 

procedures align more with other Commission hearing procedures, ensure a more streamlined 

process, and fulfill the need for more detailed procedural requirementsfor involved licensees.

PORT DEMURRAGE, DETENTION,AND FREE TIME PRACTICES 

In March 2018, based in part on a petition filed by importers, exporters, freight forwarders, and 

truckers, the Commission initiated Fact Finding Investigation No. 28 to investigate port demurrage, 

detention, and free time practices. Commissioner Rebecca F. Dye was appointed as the Fact Finding 

Officer. After extensive investigation, Commissioner Dye recommended that the Commission: 

(1) issue an interpretive rule clarifyinghow the Commission will assess the reasonableness of 

detention and demurrage practices; (2) establish a Shipper Advisory Board; and (3) continue to

support the Supply Chain Innovation Team working to address chassis availability issues in Memphis, 

Tennessee. The Commission approved the Fact Finding Officer’s recommendations.

• On September 13, 2019, the Commission initiated a related rulemaking, Docket No. 19-05, 

Interpretive Rule on Detention and Demurrage Under the Shipping Act, seeking public comment 

on its interpretation of the Shipping Act prohibition. Over one hundred comments on the 

proposed interpretive rule were received, and, on May 18, 2020, the Commission published a 
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final rule setting forth guidance on how it will determine the reasonableness of demurrage and 

detention practices under 46 U.S.C. § 41102(c).

• On October 7, 2020 the FMC issued a Notice of Inquiry, Docket No. 20-16, Vessel-Operating 

Common Carrier Definition and Application of the Term “Merchant” in Bills Of Lading, to 

examine allegations that VOCCsmay be attempting to hold companies financially responsible 

for transportation services that they did not contract for and may not legally be required to pay. 

Comments filed in the Commission’s earlier proceeding, Docket No. 19-05, raised concerns 

about the billing practices of ocean carriers. Allegations were made that VOCCs have 

expansively defined “merchant” in their respective bills of lading to include persons or entities 

with no beneficial interest in the cargo and who had not consented to be bound by the terms of 

the underlying bill of lading.

INTERNATIONAL AFFAIRS

The Commission initiated a formal investigation into whether proposed Canadian ballast water 

regulations create unfavorable conditions on U.S. shipping. This action was the subject of a petition 

by the Lake Carriers’ Association (LCA) and the investigation is being conducted pursuant to Section 

19(1)(b) of the Merchant Marine Act, 1920 (1920 Act), which gives the Commission the authority to 

take regulatory or other corrective actions.  

LCA contends that the proposed regulations are not mandated by the International Maritime 

Organization treaty, that compliance with the Canadian performance standard would be cost 

prohibitive for its members, and that the proposed regulations are intended to drive U.S. operators 

from the cross-lakes trade. The Commission found that the petition met the threshold requirements 

for consideration and voted on May 20, 2020, to accept the petition. An investigation is being 

conducted by the Commission’s designated Investigative Officer under Docket No. 20-10,

Investigation into Conditions Created by Canadian Ballast Water Regulations in the U.S./Canada Great 

Lakes Trade.

SECURITY INITIATIVES AND CROSS-AGENCY COOPERATION

The FMC is active in security initiatives relatedto U.S. ocean commerce and coordinatesthe use of 

available database systems with other agencies engaged in homeland security to improve 

identification of entities providing and usingmaritime transportation services. To facilitate these 

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

Border Protection (CBP), U.S. Department of Homeland Security,to provide FMC staff access to 

existing CBP systems and services, such as CBP’s Automated Commercial Environment (ACE). The 

FMC also has an active Inter-Agency Agreement (IAA) with the Census Bureau, U.S. Department of 

Commerce, for access to the Census’ Automated Export System (AES) database. A new MOU with the 

U.S. Coast Guard was executed in 2020. These relationships and agreements allow the FMC to access 

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

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

with the National Intellectual Property Rights Coordination Center (IPR Center), a U.S. Department of 

Homeland Security-led partnership of 25 federal and international agencies targeting intellectual 

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

to address international criminal activity. 
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ENFORCEMENT, DISPUTE RESOLUTION, AND PUBLIC INFORMATION

The Commission closely monitors and engages with industry representatives concerning the everincreasing pressure of industry consolidation and port congestion,and its impact on U.S. exporters 

and their need for efficient ocean transportation to reach foreign markets. The FMC will continue to

monitor agreements, service contracts, and tariffs in key trades as barometers of market cycles and 

shifts in the balance of supply and demand; as well as expand and promote its compliance-focused 

program to monitor and audit carrier, NVOCC, and ocean freight forwarder operations. 

The Commission’s statutory and regulatory mandate is designed to protect the shipping public and 

ensure industry adherence to U.S. shipping laws. On October 9, 2019, the Commission published a 

direct final rule to revise its enforcement procedures, Docket No. 19-07, Delegations to Bureau of 

Enforcement and Enforcement Procedures - Direct Final Rule; Request For Comments. The revised 

procedures include: (1) providingnotice to the subjects of investigations that the Commission’s 

Bureau of Enforcementintends to recommend that the Commission initiate enforcement 

proceedings and allowing them an opportunity to respond; (2)requiring Commission approval before 

formal or informal enforcement action is undertaken; and (3) requiring Commission approval of any 

proposed compromise agreements.

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

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

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

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

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

The Commission’s CADRS office receives time-sensitive requests for assistance from shippers and 

carriers. Area Representatives, strategically located near six major maritime ports, operate as the 

Commission’s front line for questions and issues facing the industry. The Commission’s Office of the 

Secretary frequently updates the FMC’s website and social media, providing time-sensitive 

notifications and important information to the public. The FMC also responds to requests for 

information from the press and the public, delivering key information directly to potentially affected 

shippers and consumers. 

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

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

other government entities on the statutes it implements. Commissioners and staff address industry 

and stakeholder groups as speakers and panelists to provide information on the latest issues related 

to Commission activities and international commerce.

MISSION CHALLENGES

The Commission constantly monitorsthe issues and challenges facing the United States’ ocean 

transportation systemand its stakeholders, and focusesits efforts to fosterthe Nation’s international

trade and economic growth. Strategic goals are accomplished by continuing to improve staff 

efficiency and closely manage resources to enforce the Commission’s governing statutes and 

regulations to protect the shipping public. 

As financial resources permit, the FMC will continue to prioritize investments needed in information 

technology (IT) to improve information security, efficiency, and greater public access, while reducing 

costs. These planned IT improvements are critical to restraining future personnel growth and 
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permitting options for the FMC to reallocate existing personnel to the strategic program needs of the 

future, consistent with OMB Memorandum M-17-22, Reforming the Federal Government and 

Reducing the Federal Workforce. 

REGULATORY REVIEW

As economic conditions alter the state of our trades, FMC regulations are revised to respond to new 

circumstances. With the goal of eliminating or reforming outdated regulations, the Commission 

designated its Managing Director as the Regulatory Reform Officer, who leads an internal team to 

identify regulations that have become less relevant or are unduly burdensome. The Commission’s 

Plan for Regulatory Reform of Existing FMC Rules (Regulatory Reform Plan), outlines the FMC’s plan 

to identify regulations that may be suitable for reform or elimination, and establisheda schedule to 

consider further review and action on each identified regulation. The Regulatory Reform Plan’s list of 

administrative and regulatory provisions, that when amended or eliminated, will make it easier and 

less costly for companies to do business, while permitting the FMC to maintain competition and 

integrity for America’s ocean supply chain. The FMC is also looking to expand recently granted 

COVID-19-related relief in service contract filing requirements to allow the industry to quickly 

respond to changing conditions, and to provide limited and temporary relief to small U.S. passenger 

vessel operators whose operations and business were disrupted by the response to COVID-19,

provided that the applicants meet key conditions. 

The Commission issued a notice of proposed rulemaking on October 9, 2019, to revise its regulations 

to reflect the statutory changes in the Frank LoBiondo Coast Guard Authorization Act of 2018, Public 

Law 115-282 (LoBiondo Act). The Commission published a final rule on February 20, 2020. The more 

significant changes adopted by the final rule included: (1) revising the regulations governing 

Commission meetings to include provisions on “nonpublic collaborative discussions,” a new type of 

meeting established by the LoBiondo Act that is not open to public observation; (2) revising the 

regulations governing ocean transportation intermediary licensing and financial responsibility to 

reflect changes to the types of activities that require a license; and (3) revising the regulations to 

reflect the statutory change making confidential any comments on filed ocean common carrier and 

marine terminal operator agreements.

PROGRAM PERFORMANCE OVERVIEW

The Commission provides a performance plan to Congress, pursuant to the Government Performance 

and Results Act (GPRA). The FMC’s Strategic Plan for Fiscal Years 2018-2022 (Strategic Plan) is posted

on its website. The FY 2020 Annual Performance Report is presented in Part Two of this Report.

ACHIEVING STRATEGIC GOAL RESULTS

The Commission’s Strategic Plan provides the foundation for planning and budgeting activities. The 

plan sets goals and objectives for each fiscal year, and contains targets and measures linked to 

objectives via strategies. These objectives, strategies, targets, and measures drive the agency’s 

budgetary process. Funding and Full-Time Equivalent (FTE)staffing levels are integrated into the 

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

budgetary and staff resources committed to the performance of each goal. During FY 2020, the 

Commission met or exceeded all of its performance targets.
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STRATEGIC MANAGEMENT OF HUMAN CAPITAL

In 2020, the FMC continued to implement the strategic goals, objectives, and strategies outlined in its 

2012-2017 Human Capital Plan. The Commission’s Human Capital Plan was developed under the 

Office of Personnel Management’s (OPM) Human Capital Assessment and Accountability Framework 

and provides for recruiting and retaining a talented workforce and appropriately managing 

succession in the Commission’s relatively small workforce. Currently, the FMC is working to develop 

a Human Capital Operating Plan (HCOP) incorporating succession planning and a greater focus on 

career development opportunities.

During 2020, the FMC responded to a global pandemic by successfully shifting into a virtual 

environment, expediting the automation of processes and procedures. The Office of Human 

Resources was able to virtually onboard all new hires and complete hiring actions remotely. As a 

result, the Commission was able to quickly backfill vacancies to remain fully operational. 

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

Government and Reducing the Federal Civilian Workforce, the Commission finalizedwork on all

objectiveslaid out in its 5-year Agency Reform and Long-Term Workforce Plan FY 2018–2022 and 

completed all goals ahead of deadlines, including:

• reducing a total of 9 SES and supervisory positions;

• realigning and combining functions within the Commission; and

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

customer service through automation projects.

Strong leadership remains a critical asset. The Commission continues to engage in succession 

management and projecting its future needs. During 2020, the FMC’s Office of the Inspector General 

completed an audit survey of the agency’s succession planning process, finding the agency has 

implemented succession planning best practices and continues to identify trends for succession 

planning purposes. 

To support succession management, the FMC continued offering leadership opportunities under the 

agency’s Leadership Development Program, and realigned and combined functions across the 

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

developed to assume greater levels of responsibility, and to allow the agency to retain talented and 

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

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

Commission.

COMPETITIVE SOURCING

The FMC submitted its FY 2020 Federal Activities Inventory Reform Act (FAIR Act) inventory to OMB 

in August 2020. The inventory identified 73 of the agency’s 128 authorized 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 FY 2020 financial statements and will 

continue effortsto improve operations and achieve unmodifiedaudit opinionsin the future.
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EXPANDED E-GOVERNMENT

The FMC worked diligently to provide the public with exceptional customer service during the COVID19 pandemic. In FY 2020, the Commission undertook two Fact Findings and related rulemaking 

activities, and the website was updated to assist users in finding this information easily. Commission 

news, documents, and events continued to be posted in a timely fashion under maximum telework 

flexibility. The Commission’s website and social media are regularly updated, providing important 

information to the public. 

The Commission continueditsmulti-year enhancement of IT systems to bring efficiencies and process 

improvements across the agency, and for its public facing web applications. The Commission’s 

Information Technology Strategic Plan covering FY 2018-2022 (IT Strategic Plan) delivers cost 

efficiencies and fiscal responsibility while planning and managing technology solutions and resource 

allocations for ongoing and future needs. The IT Strategic Plan leverages digital transformation and 

initiatives for continuous improvement of customer services and identifiesseveral overarching 

challenges including: consolidation and upgrade of legacy applications and infrastructure with 

relevant technologies; implementation of automation to streamline workflow processes and improve 

efficiency; and integration ofsecurity standards and frameworks to protect from cybersecurity risks 

all agency-owned/issued assets and commercially sensitive data.

The Commission continuesto work with the U.S. Department of Homeland Security (DHS) in 

provisioning technology infrastructure to comply with FEDRAMP and DHS continuous monitoring 

requirements for network security. Internal security tools have been deployed to effectively monitor 

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

ports and other externally visible points of attack.

CORONAVIRUS (COVID-19) IMPACT AND ACTIONS

The novel SARS-CoV-2 virus that causes the COVID-19 disease reached pandemic level in March 2020 

and significantly disrupted the global shipping industry and the cruise industry. Although 

headquarters and area representative officesremain open, the Commission established maximum 

telework flexibility for all staff to work remotely, utilizing the IT systems developed and deployed as 

part of its multi-year modernization efforts. The Commission will continue to be responsive to 

changes in industry conditions and needs during and after the pandemic.

Consistent with the Administration’s response to the negative impacts to the U.S. economy caused by 

the COVID-19 pandemic and OMB M-20-25 guidance, Implementation of Executive Order 13924, 

Regulatory Relief to Support Economic Recovery, the FMC aggressively responded by taking quick and 

meaningful action to help the shipping industry and the American economy in recovery. Work on the 

below listed FY 2020 actions will continue into FY 2021.

Providing Industry Regulatory Relief: The FMC granted a temporary exemption from Certain Service 

Contract Requirements Action to temporarily (through December 31, 2020) allow carrier parties to 

file original service contracts with their shippers up to 30 days after the contract takes effect. The 30-

day relief is being reviewed by Commission staff as suitable for permanent action, as it would provide 

for the consistent treatment of initial service contracts and amendments and provide continued 

flexibility for carriers while retaining filing and FMC oversight of service contracts. In making its 

decision on permanent action, the Commission will carefully weigh the regulatory burden on 
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 14

regulated entities and the need for the FMC to carry out its mission and statutory oversight of service 

contracts. 

Addressing Supply Chain Challenges: The COVID-19 pandemic has highlighted the economic urgency 

of responsive port and terminal operations to the effectiveness of the United States’ international 

freight delivery system. Given the Commission’s mandate to ensure an efficient and reliable

transportation system for ocean commerce, the Commission has a clear and compelling responsibility 

to actively respond to current challenges impacting the global supply chain and the American 

economy. On March 31, 2020, the Commission initiated Fact Finding 29, International Ocean 

Transportation Supply Chain Engagement. This ongoing Fact Finding convened supply chain 

innovation teams to address port and terminal operational challenges in the wake of the COVID-19 

pandemic and will make industry recommendations as warranted. 

Addressing Cruise Industry Challenges: COVID-19 has also severely impacted the cruise industry. On 

March 14, 2020, the Centers for Disease Control and Prevention (CDC) issued a No Sail Order and 

Suspension of Further Embarkation causing all but the smallest PVOs to cease all operations, which 

has been extended through September 2020. Consequently, questions concerning future travel and 

passengers’ ability to obtain refunds of monies remitted for transportation disrupted by COVID-19 

are legion. On April 30, 2020, the Commission initiated Fact Finding 30, COVID-19 Impact on Cruise 

Industry, to engage industry stakeholders, including PVOs, passengers, and MTOs, to identify 

commercial solutions to COVID-19-related issues that interfere with the operation of the cruise 

industry. 

On July 23, 2020, the Commission adopted a proposal put forward by the Fact Finding Officer 

providing limited and temporary relief to small U.S. passenger vessel operators whose operations and 

business have been disrupted by the response to COVID-19. Small passenger vessel operators may 

now qualify for alternative forms of evidence of financial responsibility, provided applicants meet key 

conditions. The relief will remain in effect until April 1, 2021. Fact Finding efforts will continue during 

the pandemic and recovery to assist with identifying commercial solutions to COVID-19-related issues 

that interfere with the operation of the cruise industry. 

FINANCIAL PERFORMANCE OVERVIEW

The FMC’s financial condition as of September 30, 2020, is sound, and internal controls are in place to 

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

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

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

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

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

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

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

position and results of the operations of the FMC, pursuant to the requirements of 31 U.S.C. 

§ 3515(b). Reports used to monitor and control budgetary resources are prepared from the same 

books and records. 
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 15

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 2020 appropriations for the FMC in the amount of $28,000,000

through P.L. 116-94, thisis an increase of $510,000 over the FY 2019 final appropriation level. 

Additionally, the Commission had reimbursable budget authority of $89,179 for work performed by 

one FMC employee at another government agency. 

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

of its budget authority by using these funds. Collections are deposited directly into the Treasury 

General Fund. This information is captured in the Statement of Custodial Activity found in the

Financial Information section of this report.

APPROPRIATION HISTORY

Appropriations History

Fiscal Years 2011-2020 ($000)

 $-

 $5,000

 $10,000

 $15,000

 $20,000

 $25,000

 $30,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 16

Full-time Equivalent History

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

board itsfull complement of five statutorily authorized Commissioners.

The continued pace of retirements and separations in FY 2020 resulted in a lower than anticipated 

FTE level, at 111.0 FTEs, with 114 employees on board at fiscal year’s end. The Commission

endeavors to develop the appropriate mix of staffing and other available resourcesto ensure 

effective accomplishment of its mission.

Full-Time Equivalent History

Fiscal Years 2011-2020

128 123 119

113 117

123 125

118

112 111

0

20

40

60

80

100

120

140

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

USES OF FUNDS 

During FY 2020, obligations against the FMC’s appropriation totaled $27.4 million representing 97.9

percent of the appropriation. Salaries and benefits are the single largest expense category at $19.3

million, or 68.8 percent of total budget. The second largest category, rent and building security 

services, is approximately $4.2 million, or 15.1 percent of the total budget. Other administrative 

expenses equal 14.0 percent. The unexpended balance of $0.59 million, or 2.1 percent of the total 

budget, will be retained for allocation to legitimate increases to existing FY 2020 obligations.

AUDIT RESULTS

The FMC again received an unmodified (“clean”) opinionon its FY 2020 financial statements from the 

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

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

FINANCIAL STATEMENT HIGHLIGHTS

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

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

from the books and records of the Commission in accordance with the formats prescribed by OMB. 
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 17

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 $8,344,901 as of September 30, 2020. This represents an increase from FY 

2019 of $1,042,281. The FMC’s assets reported in the balance sheet are summarized in the table

below. 

The Fund Balance with Treasury of 

$8,239,096 represents the FMC’s largest 

asset and comprises 98.7 percent of the 

agency’s total assets. The Fund Balance 

with Treasury is comprised only of 

annual appropriations maintained by 

the Department of the Treasury to 

address current liabilities. 

Accounts Receivable as of September 30, 2020, was $85,609 for outstanding receivables billed to 

both Federal and non-Federal entities. This accountsfor 1.0 percent of the FMC’s assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 0.1 percent of the 

FMC’s total assets as of September 30, 2020. The net value of $5,612 accounts for the depreciation of 

all assets and represents the current book value of those assets.

SUMMARY OF LIABILITIES

The FMC’s liabilities totaled$4,080,123

as of September 30, 2020, an increase of 

$1,506,582 from FY 2019. The majority 

of the increase is due to accrued 

liabilities and accounts payable.

The FMC’s Accounts Payable as of 

September 30, 2020, was $1,230,801. 

This represents the funds owed for goods 

and services received from vendors. The 

accrued liabilities of $2,550,967 represent future costs, such as accrued annual and sick leave 

balances and workman’s compensation that are not covered by current budgetary resources. 

Accumulated leave costs are recognized as they are taken, and Workman’s Compensation costs are 

recognized as they are paid out.

ANALYSIS OF CHANGES IN NET POSITION SUMMARY

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

Cumulative Results ofOperations. The total net position for FY 2020 is the result of a $464,301

decrease from FY 2019.

Summary of Assets as of

September 30, 2020

2020 2019

Fund Balance with Treasury $8,239,096 $7,250,803

Accounts Receivable $85,609 $8,708

Capital Assets $5,612 $43,109

Other $14,584 $0

Total Assets $8,344,901 $7,302,620

Summary of Liabilities as of

September 30, 2020

2020 2019

Accounts Payable $1,230,801 $287,503

Payroll Taxes $298,355 $168,237

Federal Employee Benefits $0 $2,022

Custodial Liabilities $0 $0

Accrued Liabilities $2,550,967 $2,115,779

Total Liabilities $4,080,123 $2,573,541
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 18

Unexpended Appropriations 

represent the amount of 

unobligated and unexpended 

budget authority for the 5-year 

period ending on September 30, 

2020. Unobligated balances are 

the amount of appropriations or 

other authority remaining after deducting the cumulative obligations from the amount available for 

obligation for the same period. The Cumulative Results of Operations (the cumulative excess of 

financing resources over expenses)is the net result of FMC’s operations for all active fiscal years. 

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 agency’s two

programs are Operational and 

Administrative and Office of the 

Inspector General. The Statement 

of Net Costs shows the net cost of 

operations for the agency as a 

whole and its sub-organizations 

and/or programs. Net Costs compared to Budgetary Resources can be found in the Financial 

Information section of this report. This table reflects costs attributable to all active fiscal years (2016-

2020).

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 

should equal 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 2020, the FMC had a total of $29,614,621

available,representing an increase of $914,889 from FY 2019 in budgetary resources. The budgetary 

resources represent financial activity during the accounting period for the five active fiscal years

(2016-2020).

Changes in Net Position Summary as of

September 30, 2020

2020 2019

Unexpended Appropriations $5,858,992 $6,130,844

Cumulative Results of Operations ($1,594,214) ($1,401,765)

Total Changes in Net Position $4,264,778 $4,729,079

Net Cost Summary as of

September 30, 2020

2020 2019

Operational and Administrative $28,680,366 $27,519,442

Office of Inspector General $580,585 $372,938

Total Net Cost $29,260,951 $27,892,380

Statement of Budgetary Resources as of

September 30, 2020

2020 2019

Incurred $27,584,164 $27,339,179

Unobligated Balance Unavailable $1,441,898 $1,016,510

Unobligated Balance Available $588,559 $344,043

Total Budgetary Resources $29,614,621 $28,699,732
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 19

ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

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

operations and achieve its strategic goals. The Chairman’s Statement of Assurance in the following 

section notes thatthere are no material weaknesses or instances of nonconformance to report for 

FY 2020. 

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

Enterprise Risk Management and Internal Control, the Commission’s Enterprise Risk Management 

Committee identifies, measures, and assessesrisk points across the agency. The Committee’srisk 

profile is used in conjunction with existing internal controls to improve the Commission’s 

accountability and effectiveness.

MANAGEMENT ASSURANCES

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

controls that reasonably ensure that: 

• obligations and costs comply with applicable laws;

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

• revenues and expenditures are properly recorded and accounted for.

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

financial management. The FMFIA requiresthatthe Chairman provide an assurance statement of the 

adequacy of management controls and conformance of financial systems with Government-wide

standards,thatthe Commission’smanagers 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. 

Chairman Khouri has provided his annual assurance statementin this report based on various 

sources, including knowledge ofthe daily operation of Commissionprograms and activities,regular

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

Management Services, audits of the financial statements, and implementationofthe Commission’s 

Strategic Plan. Additionally, the Chairman meets regularly with the Commission’s Senior 

Management Team and receives regularly scheduled reports fromthe FMC’s Inspector General and 

OEEO Director. 

Any deficienciesidentified in management control would be addressed at the Commission’s highest 

management levels. For example, corrective actions for significant deficiencies identified in the IT

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 2020, management and the OIG 

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

a number of recommendations from theOIG’s audits and reviews, and will work to address remaining 

open recommendations during FY 2021. 

DEBT COLLECTION IMPROVEMENT ACT OF 1996

The Debt Collection Improvement Act (DCI) enhances the ability of the government to service and 

collect debts, as it centralized the collection of non-tax delinquent debt owed to the government.
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 20

Federal agencies are required to refer delinquent accounts in excess of 180 days to Treasury for 

collection. Collection of the Commission’s delinquent debts is conducted by the Bureau of the Fiscal 

Service through the Cross-Servicing Program and Treasury Offset Program, where the names and 

taxpayer identification numbers (TIN) of the delinquent entities are matched against the TINs of 

recipients of government payments. The balance owed to the government is deducted or offset from 

the payment to the entity to satisfy the debt. The goal is to minimize the amount of delinquent debt 

owed to the government. During FY 2020, the FMC effectively managed debt collection in 

accordance with the DCI and delinquent accounts were timely submitted to Treasury.

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014 (DATA ACT)

The DATA Act, an amendment to the Federal Funding Accountability and Transparency Act of 2006 

(Public Law No. 109-282), required the establishment of government-wide data standards for

spending information that agenciesreport to Treasury, OMB, and the General Services

Administration(GSA). The Commission began reporting standardized spending informationon 

May 9, 2017. Additionally,the DATA Act required Treasury and OMB to publish standardized

spending information for free access and download on the government’sUSASpending.gov website 

beginning on May 9, 2018.

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

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

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

Act requirements. 

Fiscal Year 2020 was the third year of DATA Act implementation. Working with our financial services 

provider, the FMC complied with allrequirements and timely submitted all DATA Act certifications.

The OIG completed its second required audit of the Commission’s compliance with the DATA Act in 

November 2019, and made several recommendations for enhancing policies and procedures already 

in place. These recommendations have been incorporated into the Commission’s Data Quality Plan 

and will be reviewed by the OIG during the next required audit, which will begin in early 2021.

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 2020, the FMC maintained a 97.6 percent ontime paymentrate.

In FY 2020, the FMC paid $141 in interest payments as a result of 10 late payments. The FMC will 

work towards achieving 100 percent on-time vendor payments in future years.

PERFORMANCE MEASURE SUMMARY

The Commission does not have an in-house financial accounting system and does not receive a 

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

procurement, accounting, and financial services from Treasury’s BFS, and verifies and reconciles all 

financial statements and reports prior to submission.
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 21

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

ACT OF 2008

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

OIG audit recommendations. Action was taken to close all audit recommendations during the year. 

No significant deficiencies or material weaknesses were identified during FY 2020.

Inspector General-Issued Audits, Reports, and Evaluations -- FY 2020

A20-01: DATA Act Audit, 2019 

Date Issued Recommendations Issued Remediated in FY 2020

November 2019 3 3*

A20-02: Independent Auditors’ Report of the FMC’s FY 2019 Financial Statements

Date Issued Recommendations Issued Remediated in FY 2020

November 2019 0 N/A

A20-02a: Management Letter on Administrative Control of Funds

Date Issued Recommendations Issued Remediated in FY 2020

November 2019 6 3

A20-03: Audit of the FMC’s Compliance with the Federal Information Security Management Act 

FY 2019

Date Issued Recommendations Issued Remediated in FY 2020

October 2019 3 3

*Management believes that all 3 recommendations in Audit A20-01 have been remediated. OIG will follow up during 

the 2021 DATA Act Audit to verify and close out the recommendations..

TREASURY ASSURANCE STATEMENT – USA SPENDING RECONCILIATION

The FMC has implemented its plan to ensure data completeness and accuracy on 

www.USASpending.gov by using control totals with financial statement data and comparing samples 

of financial data to actual award documents. The prime Federal award financial data reported on 

www.USASpending.gov is correct at the reported percentage of accuracy, and the FMC has adequate 

internal controls over the underlying spending.

LIMITATIONS OF THE FINANCIAL STATEMENTS

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

operations of the Commission, pursuant to the requirements of 31 U.S.C. 3515(b). The statements 

are prepared from the books and records of the Commission in accordance with Federal GAAP and 

the formats prescribed by OMB. Reports used to monitor and control budgetary resources are 

prepared from the same books and records. The financial statements should be read with the 

understanding that they are for a component of the U.S. Government.
FMC FISCAL YEAR 2020 | Performance and Accountability Report | 22

CHAIRMAN KHOURI’S STATEMENT OF ASSURANCE

The Federal Maritime Commission’smanagers establish and 

maintain effective internal control and financial management 

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

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

Commission provides an unqualified statement of assurance that 

its internal controls supportreliable financialreporting, effective 

and efficient programmatic operations, and compliance with 

applicable laws and regulations. The Commission’sfinancial 

management systems meet the objectives of the FMFIA with no 

material weaknesses, and no instances of noncompliance.

The FMC conducted its annual assessment ofinternal control

over programmatic operations in accordance with the Office of 

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

Responsibility for Enterprise Risk Management and Internal 

Control (A-123) guidelines. Based on the results of this 

assessment, the Commission providesreasonable assurance that 

its internal control over operations, reporting, and compliance were operating in compliance with 

applicable laws and guidance, and no material weaknesses were found as of September 30, 2020.

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

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

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

providesreasonable assurance that its internal control over financial reporting as of September 30, 

2020 was operating effectively, and no material weaknesses were found in the design or operation of 

the internal control over financial reporting.

In accordance with guidance established in A-123, Appendix D, Compliance with the Federal Financial 

Management Improvement Act of 1996 (FFMIA), the CFO reviewed audit reports and other sources of 

information, and as of September 30, 2020, providesreasonable assurance that the FMC’s financial 

systems substantially comply with Federal financial system requirements, applicable Federal 

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

required.

These assessments ensure effectiveness and efficiency of Commission operations, reliability of 

reporting for internal and external use, and compliance with applicable laws and regulations. 

/s/

Michael A. Khouri

Chairman

November 16, 2020
PART TWO: ANNUAL 

PERFORMANCE REPORT 

Fiscal Year 2020
FMC FISCAL YEAR 2020 Performance and Accountability Report 24

ANNUAL PERFORMANCE REPORT

INTRODUCTION

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 agency is working to achieve. Thisreport describes progress 

towards performance targets in 2020 in furtherance of the Commission’s mission to ensure a 

competitive and reliable international ocean transportation supply system that supports the 

U.S. economy and protects the public from unfair and deceptive practices. The FMC’s current 

strategic goals and objectives are:

Strategic Goal 1: Maintain a Competitive and Reliable International Ocean Transportation 

Supply System.

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

transportation costs and/or unreasonable decreases in transportation services.

Strategic Goal 2: Protect the Public from Unlawful, Unfair and Deceptive Ocean 

Transportation Practices.

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

• Prevent public harm through licensing and financial responsibility requirements.

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

through education and outreach. 

• Impartially resolve international shipping disputes through alternative dispute resolution 

and adjudication. 

Eight performance measures in support of the Commission’s strategic goals were quantitatively 

measured during the fiscal year. Despite initial adjustments made to some business processes 

in reaction to the COVID-19 pandemic and the change in the Commission’s operating posture to 

maximum telework, the Commission met or exceeded all FY 2020 targets. Each measure, 

target, and actual result is reported in Table 1 belowand includes a description of the data used 

to measure performance, and an explanation of the procedures in place to validate and ensure 

integrity of the reported result. 

Table 2 below presents the Commission’s five-year performance trend data. While one 

performance measure was not met in FY 2018 and FY 2019, the Commission met or exceeded 

its FY 2020 performance targets in all eight performance measures. The Commission’s 

commitment to continuously improving and streamliningprocesses, and to enhance its focus 

on improving the critical processes being measured is evidenced in its year-over-year positive 

performance results.

The agency has forwarded its Performance and Accountability Report(inclusive of this Annual 

Performance Report)to the President,OMB Director, appropriate Congressional committees, 

and others as dictated by OMB Circular A-136, Revised. Additionally,this report has been 

placed on the FMC’s public website to ensure that it is accessible to interested parties. All 

Commission employees have been advised to review this report. 
FMC FISCAL YEAR 2020 Performance and Accountability Report 25

Table 1: Summary of Performance Measure Results – FY 2020

Targeted performance compared to actual results.

Strategic Goal No. 1:

Maintain a Competitive and Reliable International Ocean Transportation Supply System.

Performance Measure FY 2020

Target

FY 2020

Actual

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

are modified through negotiation to mitigate anti-competitive effects.

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

electronic filing system which identifies agreements requiring Commission level 

review. Each of those filings is then examined to determine whether any changes 

were made to the originally filed agreement that mitigated anticompetitive effects of 

the agreement. This measure is tracked on an ongoing basis.

52% 60%

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

receipt to detect actionable information including market distorting behavior.

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

system used for the electronic filing of agreement monitoring submissions. 

Performance is measured by comparing the file receipt date to the date that the 

filing was reviewed by staff analyst. The data is constantly under review and 

frequently updated.

67% 91%

Strategic Goal No. 2:

Protect the public from unlawful, unfair and deceptive ocean transportation practices.

Performance Measure FY 2020

Target

FY 2020

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.

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

and physically counting the number of cases resolved. The inventory is maintained 

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

is constantly under review and frequently updated.

77.5% 93%

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.

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

database that contains, among other data points, the date the OTI license 

application is accepted for processing and the date a licensing determination is made 

or the application process has been completed. The difference between these two 

dates is the length of time to render a decision on an OTI application accepted for 

processing. The database is maintained for daily case load management, and 

monthly and quarterly reporting purposes. The data is constantly under review and 

frequently updated.

75% 88%

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

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

casualty.

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 programfile semi-annual, monthly, and weekly 

unearned passenger revenue reports. This information is used to compare reported 

coverage against required coverage amounts.

95% 96%
FMC FISCAL YEAR 2020 Performance and Accountability Report 26

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

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

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.

86% 100%

Measure: Percentage of ombuds matters and ADR services provided by the Office of 

Consumer Affairs and Dispute Resolution Services (CADRS) closed within six months.

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

Commission on each ombuds and ADR matter opened. Cases are opened upon the 

request of the public for assistance and are subject to the normal fluctuations in 

businesses and consumers seeking help from the Commission. Cases are closed 

upon resolution, voluntary termination by the parties, or when the CADRS mediator 

determines that particular issues prevent the possibility for successful negotiation.

63% 99.6%

Measure: Percentage of formal complaints or Commission initiated orders of 

investigation completed within two years of filing or Commission initiation.

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

by the Commission and used for docket management, and monthly and annual 

reporting purposes. 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.

68% 100%
FMC FISCAL YEAR 2020 Performance and Accountability Report 27

Table 2: Performance Measure Trends, FY 2016-2020

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

Performance Measure FY 2016 FY2017 FY 2018 FY 2019 FY 2020

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

mitigate anti-competitive effects.

TARGET N/A* N/A* 50%* 51% 52%

ACTUAL N/A* N/A* 100% 67% 60%

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

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

including market-distorting behavior.

TARGET N/A* N/A* 65%* 66% 67%

ACTUAL N/A* N/A* 89% 79% 91%

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

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

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

TARGET 40.5% 41% N/A* N/A* N/A*

ACTUAL 51% 51% N/A* N/A* N/A*

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

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

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

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

TARGET 77.5% 77.5% 77.5% 77.5% 77.5%

ACTUAL 88.6% 82.8% 85.8% 97% 93%

TARGET MET/UNMET MET MET MET MET MET

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.

TARGET 75% 75% 75% 75% 75%

ACTUAL 79.7%** 95% 97% 96% 88%

TARGET MET/UNMET MET MET MET MET MET

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

against loss from non-performance or casualty.

TARGET 95% 95% 95% 95% 95%

ACTUAL 96% 100% 99% 96% 96%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of key Commission issuances, orders and reports that are available through the Commission’s website 

within 5 working days of receipt.

TARGET 80% 82% 84% 84% 86%

ACTUAL 90% 95% 97% 99% 100%

TARGET MET/UNMET MET MET MET MET MET

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

TARGET N/A 60%* 60.5%* 61% 63%

ACTUAL N/A 99% 97% 98% 99.59%

TARGET MET/UNMET N/A MET MET MET MET

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

or Commission initiation.

TARGET 60% 62% 64% 66% 68%

ACTUAL 86% 79% 38% 43% 100%

TARGET MET/UNMET MET MET UNMET UNMET MET

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

goods or funds.**

TARGET 825 N/A N/A N/A N/A

ACTUAL 778 N/A N/A N/A N/A

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

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

Strategic Plan. For additional historical data on this performance measure, see published Commission Performance and 

Accountability Reports posted on its website

**To more accurately reflect the FMC’s performance in this area, this measure was replaced in FY 2017. For additional historical 

data on this performance measure, see published Commission Performance and Accountability Reports posted on its website.
PART THREE: FINANCIAL 

INFORMATION 

Fiscal Year 2020
MESSAGE FROM THE CHIEF FINANCIAL OFFICER / 

MANAGING DIRECTOR

I am pleased to present this Financial Information section for Fiscal Year 

2020. For the 17th consecutive year, an independent auditor has rendered 

an unmodified opinion on the FMC’s financial statements, identifying no

deficiencies in internal control over financial reporting considered to be 

material weaknesses. The auditor’s tests for compliance with selected provisions of applicable laws, regulations and contracts disclosed no instances of 

noncompliance for FY 2020 reportable under U.S. generally accepted 

government auditing standards. This demonstrates the Commission’s

continued record of strong fiscal stewardship on behalf of the American people and commitment to 

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

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

generally accepted in the U.S., and requirements of OMB Circular A-136, Financial Reporting 

Requirements, revised August 27, 2020, fairly present the Commission’s financial position. 

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

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

accomplishments demonstrate the effectiveness and efficiency of the FMC’s acquisition and 

financial functions during Fiscal Year 2020:

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

nonconformance with the FMFIA and other applicable laws and regulations;

• Collecting, in civil enforcement proceedings and user fees, $188,693;

• Continued focus on internal controls and risk management, as mandated by OMB Circular A123, providing budget information in concise, reliable, and understandable formats;

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

Dollars Act of 2002, prepared from, and fully supported by, the books and records of the 

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

approved by the Federal Accounting Standards Advisory Board (FASAB), and OMB Circular A136; and

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

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

the USASpending.gov website.

The FMC continually strives for exemplary financial management of its resources, and to enhance 

operational efficiency while protecting the interest of the American shipping public. I remain

confident that the high level of quality financial management at the Commission will continue in the 

coming fiscal years. 

/s/

Karen V. Gregory

Chief Financial Officer/Managing Director

November 16, 2020
FMC FISCAL YEAR 2020 Performance and Accountability Report 30

PRINCIPAL FINANCIAL STATEMENTS

The principal financial statements presented include:

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

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

two (net position);

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

any offsetting revenue is used to determine the net cost;

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

change in net position during the reporting period;

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

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

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

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

these funds. 

LIMITATIONS OF THE FINANCIAL STATEMENTS

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

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

the statements have been prepared from the books and records of the agency in accordance 

with GAAP for Federal entities and the formats prescribed by OMB, the statements are in 

addition to the financial reports used to monitor and control budgetary resources, which are 

prepared from the same books and records. The statements should be read with the 

understanding 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 byDembo Jones, P.C.,

under contract to the FMC’s Office of the Inspector General.
REPORT ON THE FINANCIAL STATEMENTS 

AUDIT OF THE FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2020 AND 2019
FMC FISCAL YEAR 2020| Performance and Accountability Report| 32

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 16, 2020

Office of Inspector General

Dear Chairman Khouri, and Commissioners Dye, Maffei, Sola, and Bentzel:

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) 2020 and 2019 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 Dembo Jones, 

P.C. to: perform the audit of the FMC’s financialstatementsfor the fiscal years ending September 

30, 2020 and 2019; consider internal control over financial reporting; and test the agency’s

compliance with certain provisions of applicable laws, regulations, and contractsthat could have

a direct and material effect on the financial statements. The OIG contract required that the audit

be performed in accordance with U.S. Generally Accepted Government Auditing Standards and 

Office of Management and Budget (OMB) audit guidance.

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

presented, in all material respects, in conformity with U.S. Generally Accepted Accounting 

Principles; there were no material weaknesses or significant deficiencies in internal control

over financial reporting; and no reportable noncompliance issues with the laws and regulations 

tested.

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

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

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

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

internal control; or conclusions on compliance with laws and regulations. Dembo Jones is 

responsible for the attached auditors' report dated November 16, 2020 and the conclusions 

expressed in the report. However, our review disclosed no instances where Dembo Jones did not 

comply, in all material respects, with Generally Accepted Government Auditing Standards.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 33

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

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

Respectfully submitted,

/s/

Jon Hatfield

Inspector General

Attachment

cc: Office of the Managing Director 

Office of the General Counsel

Office of Budget and Finance
FMC FISCAL YEAR 2019| Performance and Accountability Report| 34

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

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

P 301.770.5100 • F 301.770.5202 www.dembojones.com P 410.290.0770 • F 410.290.0774

INDEPENDENT AUDITORS' REPORT

Independent Auditor’s Report

To Chairman Khouri

Federal Maritime Commission

In our audits of the fiscal years 2020 and 2019 financial statements of Federal Maritime 

Commission (FMC) we found:

a) FMC’s financial statements as of and for the fiscal years ended September 30, 2020 and 

2019, are presented fairly, in all material respects, in accordance with U.S. generally 

accepted accounting principles;

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

procedures we performed; and 

c) no reportable noncompliance for fiscal year 2020 with provisions of applicable laws, 

regulations and contracts we tested. 

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

includes required supplementary information (RSI), such as “Management’s Discussion and 

Analysis”; (2) our report on internal control over financial reporting; (3) our report on compliance 

with laws, regulations and contracts; and (4) agency comments. 

Report on the Financial Statements 

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

Management and Budget (OMB) Bulletin No. 19-03, Audit Requirements for Federal Financial 

Statements, we have audited FMC’s financial statements. FMC’s financial statements comprise 

the balance sheets as of September 30, 2020, and 2019; the related statements of net cost, changes 

in net position, budgetary resources and custodial activity for the fiscal years then ended; and the 

related notes to the financial statements. 

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

standards. We believe that the audit evidence we obtained is sufficient and appropriate to provide 

a basis for our audit opinions. 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 35

Dembo Jones, P.C.

Management’s Responsibility for the Financial Statements

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

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

measuring, and presenting the RSI in accordance with U.S. generally accepted accounting 

principles; (3) preparing and presenting other information included in documents containing the 

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

with the audited financial statements and the RSI; and (4) maintaining effective internal control 

over financial reporting, including the design, implementation, and maintenance of internal control 

relevant to the preparation and fair presentation of financial statements that are free from material 

misstatement, whether due to fraud or error.

Auditor’s Responsibility 

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

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

obtain reasonable assurance about whether the financial statements are free from material 

misstatement. We are also responsible for applying certain limited procedures to RSI and other 

information included with the financial statements. 

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

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

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

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

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

statements in order to design audit procedures that are appropriate in the circumstances, but not 

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 

Accordingly, we express no such opinion. An audit of financial statements also involves evaluating 

the appropriateness of the accounting policies used and the reasonableness of significant 

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

financial statements. Our audits also included performing such other procedures as we considered 

necessary in the circumstances. 

Opinion on Financial Statements

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

position as of September 30, 2020 and 2019, and its net costs of operations, changes in net position, 

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

generally accepted accounting principles.

Other Matters

Required Supplementary Information 

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

Advisory Board (FASAB) require that the RSI be presented to supplement the financial 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 36

Dembo Jones, P.C.

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

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

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

certain limited procedures to the RSI in accordance with U.S. generally accepted 

government auditing standards, which consisted of inquiries of management about the 

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

management’s responses to the auditor’s inquiries, the financial statements, and other 

knowledge we obtained during the audit of the financial statements, in order to report 

omissions or material departures from FASAB guidelines, if any, identified by these 

limited procedures. We did not audit and we do not express an opinion or provide any 

assurance on the RSI because the limited procedures we applied do not provide sufficient 

evidence to express an opinion or provide any assurance. 

Other Information 

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

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

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

the other information included with the financial statements in order to identify material 

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

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

not express an opinion or provide any assurance on the other information.

Report on Internal Control over Financial Reporting 

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

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

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

accordance with U.S. generally accepted government auditing standards. 

Management’s Responsibility

FMC management is responsible for maintaining effective internal control over financial 

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

the preparation and fair presentation of financial statements that are free from material 

misstatement, whether due to fraud or error. 

Auditor’s Responsibility 

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

September 30, 2020, in accordance with U.S. generally accepted government auditing standards, 

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

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

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

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

the FMC’s internal control over financial reporting. We are required to report all deficiencies that 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 37

Dembo Jones, P.C.

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

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

information and ensuring efficient operations. 

Definition and Inherent Limitations of Internal Control over Financial Reporting 

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

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

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

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

principles, and assets are safeguarded against loss from unauthorized acquisition, use, or 

disposition, and (2) transactions are executed in accordance with provisions of applicable laws, 

including those governing the use of budget authority, regulations and contracts, noncompliance 

with which could have a material effect on the financial statements. 

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

detect and correct, misstatements due to fraud or error. 

Results of Our Consideration of Internal Control over Financial Reporting 

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

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

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

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

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

However, material weaknesses may exist that have not been identified. 

Intended Purpose of Report on Internal Control over Financial Reporting 

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

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

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

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

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

internal control over financial reporting is not suitable for any other purpose. 

Report on Compliance with Laws, Regulations and Contracts

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

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

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

these tests. We performed our tests of compliance in accordance with U.S. generally accepted 

government auditing standards.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 38

Dembo Jones, P.C.

Management’s Responsibility

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

FMC. 

Auditor’s Responsibility 

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

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

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

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

FMC. 

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

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

disclosed no instances of noncompliance for fiscal year 2020 that would be reportable under U.S. 

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

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

Accordingly, we do not express such an opinion. 

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

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

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

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

accordance with U.S. generally accepted government auditing standards in considering 

compliance. Accordingly, this report on compliance with laws, regulations and contracts is not 

suitable for any other purpose.

Rockville, Maryland

November 16, 2020
FMC FISCAL YEAR 2020| Performance and Accountability Report| 39

APPENDIX A

FEDERAL MARITIME COMMISSION COMMENTS ON AUDIT REPORT

Federal Maritime Commission

Washington, DC 20573

 Office of the 

Managing Director

November 16, 2020

Donald K. Marshall, CPA

Dembo Jones, P.C.

6010 Executive Boulevard, Suite 900

Rockville, MD 20852

Dear Mr. Marshall:

I have reviewed the financial statements audit report for the Federal Maritime Commission for 

fiscal year 2020. I concur with the audit report’s findings that the financial statements fairly 

present the Commission’s financial position during the fiscal year ending September 30, 2020, 

and that the financial statements are in conformity with U.S. Generally Accepted Accounting 

Principles; that the FMC has maintained, in all material respects, effective internal control over 

financial reporting; and that there were no instances of reportable noncompliance with laws 

and regulations tested by the auditors.

The Commission appreciates Dembo Jones’ work over the past fiscal year.

Sincerely,

/s/

Karen V. Gregory

Chief Financial Officer / Managing Director
FMC FISCAL YEAR 2020| Performance and Accountability Report| 40

APPENDIX B

FEDERAL MARITIME COMMISSION FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

Table of Contents

Balance Sheet.............................................................................................41

Statement of Net Cost...............................................................................42

Statement of Changes in Net Position.......................................................43

Statement of Budgetary Resources...........................................................44

Statement of Custodial Activity.................................................................45

Notes to the Financial Statements.............................................................46

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 41

FEDERAL MARITIME COMMISSION

BALANCE SHEET

AS OF SEPTEMBER 30, 2020 AND 2019

(In Dollars)

2020 2019

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 8,239,096 $ 7,250,803 

Other (Note 5) 14,584 -

Total Intragovernmental 8,253,680 7,250,803 

Accounts Receivable, Net (Note 3) 85,609 8,708 

General Property, Plant, and Equipment, Net (Note 4) 5,612 43,109 

Total Assets $ 8,344,901 $ 7,302,620 

Liabilities:

Intragovernmental

Accounts Payable $ 77,636 $ 3,026 

Other (Note 7) 298,355 168,237 

Total Intragovernmental 375,991 171,263 

Accounts Payable 1,153,165 284,477 

Federal Employee and Veteran Benefits (Note 6) - 2,022 

Other (Note 7) 2,550,967 2,115,779 

Total Liabilities (Note 6) $ 4,080,123 $ 2,573,541 

Net Position:

Unexpended Appropriations - All Other Funds $ 5,858,992 $ 6,130,844 

Cumulative Results of Operations - All Other Funds (1,594,214) (1,401,765)

Total Net Position $ 4,264,778 $ 4,729,079 

Total Liabilities and Net Position $ 8,344,901 $ 7,302,620 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 42

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(In Dollars)

2020 2019

Gross Program Costs:

Operational and Administrative:

Gross Costs $ 28,769,515 $ 27,603,806 

Less: Earned Revenue (89,149) (84,364)

Net Program Costs $ 28,680,366 $ 27,519,442 

Office of Inspector General:

Gross Costs $ 580,585 $ 372,938 

Net Program Costs $ 580,585 $ 372,938 

Net Cost of Operations $ 29,260,951 $ 27,892,380 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 43

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(In Dollars)

2020 2019

Unexpended Appropriations:

Beginning Balances $ 6,130,844 $ 5,326,391 

Budgetary Financing Sources:

Appropriations Received 28,000,000 27,490,000 

Other Adjustments (229,916) (328,969)

Appropriations Used (28,041,936) (26,356,578)

Total Budgetary Financing Sources (271,852) 804,453 

Total Unexpended Appropriations $ 5,858,992 $ 6,130,844 

Cumulative Results of Operations:

Beginning Balances $ (1,401,765) $ (1,186,647)

Budgetary Financing Sources:

Appropriations Used 28,041,936 26,356,578 

Other Financing Sources (Non-Exchange):

Imputed Financing 1,026,536 1,320,684 

Other 30 -

Total Financing Sources 29,068,502 27,677,262 

Net Cost of Operations (29,260,951) (27,892,380)

Net Change (192,449) (215,118)

Cumulative Results of Operations $ (1,594,214) $ (1,401,765)

Net Position $ 4,264,778 $ 4,729,079 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 44

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(In Dollars)

2020 2019

Budgetary Resources:

Unobligated balance from prior year budget authority, net 

(discretionary and mandatory) $ 1,525,442 $ 1,125,368 

Appropriations 28,000,000 27,490,000 

Spending authority from offsetting collections 89,179 84,364 

Total Budgetary Resources $ 29,614,621 $ 28,699,732 

Status of Budgetary Resources:

New obligations and upward adjustments (total) $ 27,584,164 $ 27,339,179 

Unobligated balance, end of year:

 Apportioned, unexpired account 588,559 344,043 

Unexpired unobligated balance, end of year 588,559 344,043 

Expired unobligated balance, end of year 1,441,898 1,016,510 

Unobligated balance, end of year (total) 2,030,457 1,360,553 

Total Budgetary Resources $ 29,614,621 $ 28,699,732 

Outlays, Net and Disbursements, Net:

Outlays, net (total) 26,781,791 26,144,852 

Distributed Offsetting Receipts (191,075) (233,789)

Agency outlays, net $ 26,590,716 $ 25,911,063 

Disbursements, net (total) (mandatory) $ 26,781,791 $ 26,144,852 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 45

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019

(In Dollars)

2020 2019

Total Custodial Revenue:

Sources of Cash Collections:

Miscellaneous $ 188,693 $ 891,166 

Total Cash Collections (Note 14) 188,693 891,166 

Accrual Adjustments 77,637 170 

Total Custodial Revenue 266,330 891,336 

Disposition of Collections:

Transferred to Others (by Recipient) 188,693 891,166 

Increase/(Decrease) in Amounts Yet to be Transferred 77,631 (23)

Retained by the Reporting Entity 6 193 

Total Disposition of Collections 266,330 891,336 

Net Custodial Activity $ - $ -
FMC FISCAL YEAR 2020| Performance and Accountability Report| 46

FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. REPORTING ENTITY

The Federal Maritime Commission (FMC or Commission) was established as an independent regulatory 

agency on August 12, 1961. The FMC is responsible for the regulation of oceanborne transportation in 

the foreign commerce of the United States. The principal statutes or statutory provisions administered by 

the Commission are the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998, 

the Foreign Shipping Practices Act of 1988 (FSPA), section 19 of the Merchant Marine Act of 1920, and 

sections 2 and 3 of Public Law No. 89-777.

The Commission monitors the activities of ocean common carriers, marine terminal operators (MTOs), 

agreements among ocean common carriers and/or MTOs, ports and ocean transportation intermediaries 

(non-vessel-operating common carriers and ocean freight forwarders) operating in the U.S. foreign 

commerce to ensure they maintain just and reasonable practices; maintains trade monitoring, enforcement 

and dispute resolution programs designed to assist regulated entities in achieving compliance and to 

detect and remedy malpractices and violations of the 1984 Act; monitors the laws and practices of foreign 

governments which could have a discriminatory or otherwise adverse impact on shipping conditions in 

U.S. trades, and imposes remedial action, as appropriate, pursuant to section 19 of the 1920 Act or FSPA; 

enforces special regulatory requirements applicable to carriers owned or controlled by foreign 

governments; processes and reviews agreements, service contracts, and service arrangements pursuant to 

the 1984 Act for compliance with statutory requirements; and reviews common carriers’ privately 

published tariff systems for accessibility and accuracy, as required by OSRA.

The FMC also issues licenses to qualified ocean transportation intermediaries (OTIs) in the U.S., ensures 

that all OTIs are bonded or maintain other evidence of financial responsibility, and ensures that passenger 

vessel operators (PVOs) demonstrate adequate financial responsibility in case of nonperformance of 

voyages or death or injury occurring to passengers.

The FMC is composed of five Commissioners appointed for five-year terms by the President with the 

advice and consent of the Senate. The President designates one of the Commissioners to serve as 

Chairman, who is the chief executive and administrative officer of the FMC.

The FMC reporting entity is comprised of General Funds and General Miscellaneous Receipts. General 

Funds are accounts used to record financial transactions arising under congressional appropriations or 

other authorizations to spend general revenues. General Fund Miscellaneous Receipts are accounts 

established for receipts of non-recurring activity, such as fines, penalties, fees and other miscellaneous 

receipts for services and benefits.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 47

The FMC makes custodial collections and holds custodial receivables that are non-entity assets and are 

transferred to Treasury at fiscal year-end. The FMC has rights and ownership of all assets reported 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

FBWT is an asset of a reporting entity and a liability of the General Fund. It is the aggregate amount of the 

FMC’s funds with Treasury in expenditure, receipt, and deposit fund accounts. Appropriated funds 

recorded in expenditure accounts are available to pay current liabilities and finance authorized purchases. 

The FMC does not maintain bank accounts of its own, has no disbursing authority, and does not maintain 

cash held outside of Treasury. When the reporting entity seeks to use FBWT or investments in Government 

securities to liquidate budgetary obligations, Treasury will finance the disbursements in the same way it 

finances all other disbursements, which is to borrow from the public if there is a budget deficit (and to use 

current receipts if there is a budget surplus). Funds are disbursed for the agency on demand.

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 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 48

capitalization criteria are expensed upon receipt. Applicable standard governmental guidelines regulate 

the disposal and convertibility of agency property, equipment, and software. The useful life classifycations for capitalized assets are as follows:

Description Useful Life (years)

Leasehold Improvements 5

Office Furniture 5

Computer Equipment 5

Office Equipment 5

Software 5

G. ADVANCES AND PREPAID CHARGES

Advance payments are generally prohibited by law. There are some exceptions, such as reimbursable 

agreements, subscriptions and payments to contractors and employees. Payments made in advance of the 

receipt of goods and services are recorded as advances or prepaid charges at the time 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 and FOIA request fees.

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, re-stored leave, and sick leave in certain circum-stances, are 

accrued at year-end, based on latest pay rates and unused hours of leave. Funding will be obtained from 

future financing sources to the extent that current or prior year appropriations are not available to fund 

annual and other types of vested leave earned but not taken. Non-vested leave is expensed when used. 

Any liability for sick leave that is accrued but not taken by a Civil Service Retirement System (CSRS)-

covered employee is transferred to the Office of Personnel Management (OPM) upon the retirement of 

that individual. Credit is given for sick leave balances in the computation of annuities upon the retirement 

of Federal Employees Retirement System (FERS)-covered employees.

J. ACCRUED AND ACTUARIAL WORKERS’ COMPENSATION

The FECA administered by the U.S. Department of Labor (DOL) addresses all claims brought by the 

FMC employees for on-the-job injuries. The DOL bills each agency annually as its claims are paid, but 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 49

payment of these bills is deferred for two years to allow for funding through the budget process. 

Similarly, employees that the FMC terminates without cause may receive unemployment compensation 

benefits under the unemployment insurance program also administered by the DOL, which bills each 

agency quarterly for paid claims. Future appropriations will be used for the reimbursement to DOL. The 

liability consists of (1) the net present value of estimated future payments calculated by the DOL, and (2) 

the unreimbursed cost paid by DOL for compensation to recipients under the FECA.

K. RETIREMENT PLANS

FMC employees participate in either the CSRS or the FERS. The employees who participate in CSRS are 

beneficiaries of FMC matching contribution, equal to 7% of pay, distributed to their annuity account in 

the Civil Service Retirement and Disability Fund.

Prior to December 31, 1983, all employees were covered under the CSRS program. From January 1, 

1984 through December 31, 1986, employees had the option of remaining under CSRS or joining FERS 

and Social Security. Employees hired as of January 1, 1987 are automatically covered by the FERS 

program. Both CSRS and FERS employees may participate in the federal Thrift Savings Plan (TSP). 

FERS employees receive an automatic agency contribution equal to 1% of pay and FMC matches any 

employee contribution up to an additional 4% percent of pay. For FERS participants, FMC also 

contributes the employer’s matching share of Social Security.

FERS employees and certain CSRS reinstatement employees are eligible to participate in the Social 

Security program after retirement. In these instances, FMC remits the employer’s share of the required 

contribution.

The FMC recognizes the imputed cost of pension and other retirement benefits during the employees’ 

active years of service. OPM actuaries determine pension cost factors by calculating the value of pension 

benefits expected to be paid in the future and communicate these factors to FMC for current period 

expense reporting. OPM also pro-vides 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 statement’s 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 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 50

recognized by the receiving entity for costs that are paid by other entities. FMC recognized imputed costs 

and financing sources in fiscal years 2020 and 2019 to the extent directed by accounting standards.

O. CONTINGENCIES

Liabilities are deemed contingent when the existence or amount of the liability cannot be determined with 

certainty pending the outcome of future events. FMC recognizes contingent liabilities in the 

accompanying balance sheet and statement of net cost, when it is both probable and can be reasonably 

estimated. The FMC discloses contingent liabilities in the notes to the financial statements when the 

conditions for liability recognition are not met or when a loss from the outcome of future events is more 

than remote. In some cases, once losses are certain, payments may be made from the Judgment Fund 

maintained by the U.S. Treasury rather than from the amounts appropriated to FMC for agency 

operations. Payments from the Judgment Fund are recorded as an “Other Financing Source” when made.

P. CLASSIFIED ACTIVITIES

Accounting standards require all reporting entities to disclose that accounting standards allow certain 

presentations and disclosures to be modified, if needed, to prevent the disclosure of classified 

information.

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2020 and 2019, 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 11).

2020 2019

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 588,559 $ 344,043 

 Unavailable 1,441,898 1,016,510 

Obligated Balance Not Yet Disbursed 6,208,639 5,890,250 

Total $ 8,239,096 $ 7,250,803 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 51

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2020 and 2019, were as follows:

The accounts receivable is primarily made up of services provided to the public. Historical experience 

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

accounts as of September 30, 2020 and 2019.

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2020:

Schedule of Property, Equipment, and Software as of September 30, 2019:

NOTE 5. OTHER ASSETS

Other assets account balances as of September 30, 2020 and 2019, were as follows:

2020 2019

With the Public

Miscellaneous Accounts Receivable $ 85,306 $ 8,539

Interest Receivable 70 24

Penalties and Fines Receivable 233 145

Total Public Accounts Receivable $ 85,609 $ 8,708

Total Accounts Receivable $ 85,609 $ 8,708

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 316,289 310,677 5,612

Total $ 541,289 $ 535,677 $ 5,612

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 316,289 273,180 43,109

Total $ 541,289 $ 498,180 $ 43,109

2020 2019

Intragovernmental

Advances and Prepayments $ 14,584 $ -

Total Intragovernmental Other Assets $ 14,584 $ -

Total Other Assets $ 14,584 $ -
FMC FISCAL YEAR 2020| Performance and Accountability Report| 52

NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2020 and 2019, 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 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. 

2020 2019

Intragovernmental – Unemployment Insurance $ - $ 822

Unfunded Leave 1,605,943 1,448,743

Actuarial FECA - 2,022

Other Liabilities 25

Total Liabilities Not Covered by Budgetary Resources $ 1,605,943 $ 1,451,612

Total Liabilities Covered by Budgetary Resources 2,394,690 1,119,930

Total Liabilities Not Requiring Budgetary Resources 79,490 1,999

Total Liabilities $ 4,080,123 $ 2,573,541
FMC FISCAL YEAR 2020| Performance and Accountability Report| 53

NOTE 7. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2020 were as follows:

Other liabilities account balances as of September 30, 2019 were as follows:

Current Non Current Total

Intragovernmental

Payroll Taxes Payable $ 218,865 $ - $ 218,865

 Custodial Liability 79,490 - 79,490

Total Intragovernmental Other Liabilities $ 298,355 $ - $ 298,355

With the Public

 Payroll Taxes Payable $ 29,851 $ - $ 29,851

 Accrued Funded Payroll and Leave 915,173 - 915,173

 Unfunded Leave 1,605,943 - 1,605,943

Total Public Other Liabilities $ 2,550,967 $ - $ 2,550,967

Current Non Current Total

Intragovernmental

Unemployment Insurance Liability $ 822 $ - $ 822

Payroll Taxes Payable 165,416 - 165,416

 Custodial Liability 1,999 - 1,999

Total Intragovernmental Other Liabilities $ 168,237 $ - $ 168,237

With the Public

 Payroll Taxes Payable $ 24,076 $ - $ 24,076

 Accrued Funded Payroll and Leave 642,935 - 642,935

 Unfunded Leave 1,448,743 - 1,448,743

Other Liabilities - 25 25

Total Public Other Liabilities $ 2,115,754 $ 25 $ 2,115,779
FMC FISCAL YEAR 2020| Performance and Accountability Report| 54

NOTE 8. 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 the periods ended 

September 30, 2020 and 2019, respectively were $3,123,201 and $3,334,306, 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 9. COMMITMENTS AND CONTINGENCIES

FMC records commitments and contingent liabilities for legal cases in which payment has been deemed 

probable, and for which the amount of potential liability has been estimated, including certain judgments 

that have been issued against the agency. The FMC has no knowledge of any lawsuits/investigations in 

which payment is deemed probable.

Location Term Lease Expiration Date

Tacoma, WA 10 years 6/30/2022

Hollywood, FL 10 years 5/31/2025

San Pedro, CA 10 years 9/30/2021

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 3/15/2024

Houston, TX 15 years 10/1/2033

Fiscal Year Totals

2021 $ 3,556,568 

2022 3,708,862 

2023 331,498 

2024 23,775 

2025 15,842 

Thereafter 121,391 

Total Future Minimum Payments $ 7,757,937
FMC FISCAL YEAR 2020| Performance and Accountability Report| 55

NOTE 10. INTER-ENTITY COSTS

FMC recognizes certain inter-entity costs for goods and services that are received from other federal 

entities at no cost or at a cost less than the full cost. Certain costs of the providing entity that are not fully 

reimbursed are recognized as imputed cost and are offset by imputed revenue. Such imputed costs and 

revenues relate to employee benefits and claims to be settled by the Treasury Judgement Fund. FMC 

recognizes as inter-entity costs the amount of accrued 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 periods ended September 30, 2020 and 2019, respectively, inter-entity costs were as follows:

NOTE 11. UNDELIVERED ORDERS AT THE END OF THE PERIOD

As of September 30, 2020, budgetary resources obligated for undelivered orders were as follows:

As of September 30, 2019, budgetary resources obligated for undelivered orders were as follows:

NOTE 12. EXPLANATION OF DIFFERENCES BETWEEN THE SBR AND THE BUDGET OF 

THE U.S. GOVERNMENT

The President’s Budget that will include fiscal year 2020 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2021 and can be 

found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2021 Budget of the United States 

Government, with the "Actual" column completed for 2019, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

In Millions

2020 2019

Office of Personnel Management $ 1,026,536 $ 1,320,684 

Total Imputed Financing Sources $ 1,026,536 $ 1,320,684 

Federal Non-Federal Total

Paid Undelivered Orders $ 14,584 $ - $ 14,584

Unpaid Undelivered Orders 1,454,064 2,359,886 3,813,950

Total Undelivered Orders $ 1,468,648 $ 2,359,886 $ 3,828,534

Federal Non-Federal Total

Unpaid Undelivered Orders $ 1,222,383 $ 3,547,908 $ 4,770,291

Total Undelivered Orders $ 1,222,383 $ 3,547,908 $ 4,770,291

New Obligations

Budgetary & Upward Net

Resources Adjustments Outlays

Combined Statement of Budgetary Resources $ 29 $ 27 $ 26

Unobligated Balance Not Available $ (1) $ - $ -

Difference - Due to Rounding $ (1) $ - $ 1

Budget of the U.S. Government $ 27 $ 27 $ 27
FMC FISCAL YEAR 2020| Performance and Accountability Report| 56

NOTE 13. CUSTODIAL ACTIVITY

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

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

as custodial revenue on the Statement of Custodial Activity. The type of cash collected is for fines, 

penalties and administrative fees. A small portion is for interest on the past due fines. Another 

component of the custodial revenue is general proprietary receipts (User Fees) for the application of 

licenses issued to qualified Ocean Transportation Intermediaries (OTI’s) in the U.S., FMC reviews 

petitions, status changes and special permission fees. FMC believes that all fines, penalties, administrative 

fees and user fees will be collected in full. There are no material uncollectible accounts as of September 

30, 2020 and 2019.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows:

2020 2019

Fines, Penalties, and Forfeitures $ 103 $ 660,125

General Fund Proprietary Receipts (User fees) 190,950 233,770

Refunds of Proprietary Receipts (User fees) (2,375) (2,747)

Interest 15 19

Total Custodial Collections $ 188,693 $ 891,166
FMC FISCAL YEAR 2020| Performance and Accountability Report| 57

NOTE 14. RECONCILIATION OF NET COST TO NET OUTLAYS 

The reconciliation of net outlays, presented on a budgetary basis, and the net cost, presented on an accrual 

basis, provides an explanation of the relationship between budgetary and financial accounting 

information. 

Reconciliation of Net Cost Outlays as of September 30, 2020:
FMC FISCAL YEAR 2020| Performance and Accountability Report| 58

Reconciliation of Net Cost Outlays as of September 30, 2019:
FMC FISCAL YEAR 2019| Performance and Accountability Report| 59

PART FOUR: OTHER 

INFORMATION 

Fiscal Year 2020
FMC FISCAL YEAR 2020| Performance and Accountability Report| 60

INSPECTOR GENERAL’S STATEMENT ON MANAGEMENT AND 

PERFORMANCE CHALLENGES

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 16, 2020

Office of Inspector General

TO: Chairman Khouri

Commissioner Dye

Commissioner Maffei

Commissioner Sola

Commissioner Bentzel

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 to be included in the Federal Maritime Commission’s (FMC) 

Performance and Accountability Report (PAR) for fiscal year (FY) 2020. 

This year, the Office of Inspector General (OIG) has identified two management and performance 

challenges, the Coronavirus Disease 2019 (COVID-19) pandemic and information technology (IT) security. 

Both challenges are also government-wide challenges and not unique to the FMC. This assessment is based 

on information derived from a combination of sources, including OIG evaluation work; Commission reports; 

Federal government reports; and a general knowledge of the Commission’s programs. 

The Reports Consolidation Act of 2000 permits agency comment on the inspector general’s statements. 

Agency comments, if applicable, are to be included in the final version of the FMC PAR that is due by 

November 16, 2020. 

/s/

Jon Hatfield

Attachment

Cc: Karen V. Gregory, Managing Director

Peter J. King, Deputy Managing Director

Steven J. Andersen, General Counsel

Kathie L. Keys, Special Assistant to the Managing Director
FMC FISCAL YEAR 2020| Performance and Accountability Report| 61

Office of Inspector General (OIG)

Fiscal Year 2020 Management Challenges

The Management Challenge - Coronavirus Disease 2019 (COVID-19) Pandemic

COVID-19 has created significant challenges in the United States and globally due to the 

serious health and economic impact and turmoil, and the FMC has experienced this impact. The 

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

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

The Commission has been focused on COVID-19 related impacts on ocean shipping and the cruise 

industry. 

Compounding the challenges created by COVID-19 has been the location where most of 

the FMC’s employees have been working the past several months – remotely, i.e. at home. 

Effectively utilizing existing computer technology, and with the implementation of remote work 

processes, the Commission established maximum telework flexibility due to the pandemic for its 

entire workforce. The agency headquarters has remained open throughout the pandemic, and 

several employees continue to work in their offices in Washington, D.C. Procedures have been 

established for those employees who continue to work at the FMC’s headquarters, to include a 

requirement for face coverings and social distancing to maintain the health and safety of the 

workforce and public. 

Agency Progress in Addressing the Challenge

The agency maintains a maximum telework operating status, and continued limited on-site 

activities as needed. Among the FMC’s COVID-19 focus have been fact finding investigations, 

potential for regulatory relief by the agency, and an advanced notice of proposed rulemaking to 

address the process for cruise passengers to obtain a refund when a vessel does not sail. The cruise 

industry, an area the FMC has some statutory authority, has experienced significant economic 

impact due to COVID-19. Specifically, the Director of the Centers for Disease Control issued a 

No Sail Order for cruise ships in March 2020, with additional extensions since then, and continuing 

until at least October 31, 2020. 

Early on in the response to COVID-19, the FMC Chairman asked his fellow 

Commissioners and agency staff to identify possible regulatory relief the agency could grant that 

might make a difference to American shippers and consumers, ocean carriers, non-vesseloperating 

common carriers, freight forwarders, and marine terminal operators. In April, FMC instituted a 

change in the deadline for parties to file service contracts, a relief through December 31, 2020. In 

addition, Commissioners have led fact finding investigations related to the COVID-19 impact on 

the supply chain and cruise industry. 

The Challenge Ahead

Consistent with Federal guidance, the FMC has drafted a plan to provide guidance for 

resuming a pre-COVID-19 operational status, while maintaining the health and safety of the FMC 

workforce and public. The plan consists of a phased approach based on the advice of public health 

experts. Guidance has been drafted to implement the phased approach to re-occupy facilities, 

provide safety measures and protocols, and set forth employee responsibilities for the new safety 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 62

requirements. FMC management provided the agency’s workforce with the draft plan to resume 

pre-COVID operations and invited comments and questions. Along with other offices, the OIG 

reviewed the plan and provided comments to management. 

During the pandemic, the FMC Chairman has provided weekly updates to the workforce 

on the agency’s operating status, work activities, and reminders to follow health officials’ COVID19 guidelines, to include face coverings in public and social distancing. In a weekly update in 

October, the Chairman advised staff the agency continues to monitor local conditions at 

headquarters and field offices. In addition, the Chairman reiterated that the agency’s commitment 

to the safety and health of Commission employees, contractors, and the public will continue to 

lead the agency’s considerations and discussions regarding a return to the workplace and COVID19. The OIG will continue to be engaged with agency management on their planning and decisions 

to return to a pre-COVID-19 operational status safely and effectively.

The Management Challenge - Information Technology (IT) Security

Over the last several years and continuing in FY 2020, the OIG has found the FMC to be 

focused on maintaining an effective IT security program. However, a computer incident at the 

FMC in the fall of 2019 demonstrated that IT security continues to be a key risk for the agency. 

The Government Accountability Office (GAO) maintains a high-risk program to focus attention 

on government operations that GAO identifies as high-risk due to their greater vulnerabilities to 

fraud, waste, abuse, and mismanagement or the need for transformation to address economy, 

efficiency, or effectiveness challenges. GAO first designated Federal information security as a 

government-wide high-risk area over 20 years ago. In 2003, GAO expanded this area to include 

computerized systems supporting the nation’s critical infrastructure and, in 2015, GAO further 

expanded this area to include protecting the privacy of personally identifiable information. 

The Office of Management and Budget (OMB) publishes an annual report to Congress in 

accordance with the Federal Information Security Modernization Act of 2014 (FISMA). OMB’s 

annual report provides an analysis of agency application of intrusion detection and prevention 

capabilities, and information from chief information officers and inspectors general from across 

the executive branch. OMB’s FY 2019 report recognizes that cybersecurity threats facing the 

Federal government and our Nation reinforce the need for strengthening the digital defense of the 

country's IT environment. According to the OMB report, America's infrastructure, both public and 

private, continues to be a top target of malicious cyber actors intent on disrupting the geopolitical 

and socioeconomic stability and prosperity of the United States. OMB states that this persistent 

threat is a constant reminder that effective cybersecurity is required by all organizations - public 

and private - to identify, prioritize, and manage cyber risks across their enterprise.

Agency Progress in Addressing the Challenge

FISMA establishes information security program and evaluation requirements for Federal 

agencies in the executive branch, including the FMC. Each year, the FMC OIG performs an 

independent audit of the information security program and practices of the agency. The results of 

the audit are reported annually to OMB; selected congressional committees; the Comptroller 

General; and the FMC’s Commission and management. 

In the OIG’s Audit of the FMC’s Compliance with the Federal Information Security 

Modernization Act (FISMA) FY 2020, the OIG found the FMC had effectively implemented all 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 63

the prior year FISMA recommendations. Further, the FY 2020 FISMA audit contained two new 

recommendations to address one finding. Specifically, the FY 2020 FISMA audit found that 

although the FMC has various information technology security policies and procedures, several 

had not been reviewed or updated in a timely manner, or they were lacking from development into 

a formalized policy. The OIG recommended the agency review, update, and finalize the applicable 

policies and procedures in accordance with Federal and agency requirements.

The Challenge Ahead

The FMC’s Office of Information Technology reported in late 2019 the deployment of 

several additional IT security protocols to further protect the FMC’s computer network. 

Significant cybersecurity incidents in the Federal government in recent years highlight that 

continued advancements in computer and communication technologies will likely result in 

ongoing challenges protecting Federal systems, to include the FMC. Particularly because of the 

FMC’s small size and limited resources, it is critical for the FMC to prioritize security controls 

and enhancements based on risk and continue to properly plan and partner with Federal agencies 

to protect vital agency resources.

COMMENTS ON INSPECTOR GENERAL’S STATEMENT 

The Commission welcomesthe Inspector General’s annual audits,reviews, and

recommendations for strengthening its IT security controls and helping it to mitigate risk

overall. These play an essential role in keeping the Commission up-to-date on the significant 

risks and challenges facing the Federal government as a whole, and are invaluable in aiding the 

Commission in protecting its resources. Additionally, the Commission appreciates the OIG’s 

continuing engagement with management on the planning and decision-makingprocessto 

safely return to a pre-COVID-19 operational status. 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 64

FINANCIAL STATEMENT AUDIT SUMMARY

Table 1 is a summary of the results of the independent audit of the FMC’s financial statements 

by the agency’s auditors in connection with the FY 2020 audit.

MANAGEMENT ASSURANCES SUMMARY

Table 2 is a summary of management assurances related to the effectiveness of internal control 

over the FMC’s financial reporting and operations, and its conformance with financial 

management system requirements under Sections 2 and 4, respectively, of the FMFIA. This 

table also summarizes compliance with the FFMIA, which is not applicable to the Commission.

Table 1. Summary of Financial Statement Audit

Audit Opinion Unmodified

Restatement No

Material Weaknesses Beginning balance New Resolved Consolidated Ending Balance

None n/a n/a n/a n/a n/a

Total Material Weaknesses None None n/a n/a None

Table 2. Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses None n/a n/a n/a n/a None

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of weakness] None n/a n/a n/a n/a None

Total Material Weaknesses None n/a n/a n/a n/a None

Compliance with Federal Financial Management System Requirements (FMFIA § 4)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of noncompliance] None n/a n/a n/a n/a None

Total noncompliances None n/a n/a n/a n/a None

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. Federal Financial Management System Requirements FFMIA does not apply to the FMC n/a

2. Applicable Federal Accounting Standards FFMIA does not apply to the FMC n/a

3. USSGL at Transaction Level FFMIA does not apply to the FMC n/a
FMC FISCAL YEAR 2020| Performance and Accountability Report| 65

IMPROPER PAYMENTS INFORMATION ACT

NARRATIVE SUMMARY OF IMPLEMENTATION EFFORTS FOR FY 2020

The FMC complies with the requirements of OMB Circular A-123 (Appendix C), Requirements 

for Payment Integrity Improvement, which implements the provisions of the Improper 

Payments Information Act of 2002, as amended by the Improper Payments Elimination and 

Recovery Act of 2010 (IPERA), and the Improper Payments Elimination and Recovery 

Improvement Act of 2012 (IPERIA), and directs federal agencies to review and assess all 

programs and activities they administer, and furtheridentify those deemed to be susceptible to 

significant improper payments. 

During FY 2020 and using its year-end, audited financials,the FMC began itstriennialrisk 

assessment analysis in accordance with OMB Circular A-123, which defines significant improper 

payments to be erroneous payments in a program “exceeding (1) both 1.5 percent and 

$10,000,000 of all program or activity payments made during the fiscal year reported or

$100,000,000 (regardless of the improper payment percentage of total program outlays).” The 

FMC has two programs: operations and administration (O&A) and the Office of Inspector 

General (OIG). Since the FMC’s total FY 2020 appropriation was $28,000,000, which is well 

below the significant improper payment threshold tests, the FMC assesses its risk for improper 

payments at the payment activity level. The assessment considered certain risk factors that 

would likely cause improper payments. It covers all program disbursement activitiesincluding 

travel, payroll, intragovernmental transactions, and commercial vendor payments. As of 

September 30, 2020, the FMC does not meet the baseline criteria (both 1.5 percent and 

$10,000,000 of the total program) to trigger a quantitative risk assessment as stated in OMB 

Circular A-123 (Appendix C) and shown in the following chart.

Federal Maritime Commission IPERIA Risk Assessment 2020

($millions*)

Payment Activities Total Payments 

(TP)

Improper Payments $

(IP)

Improper Payments 

%

(IP/TP)

Test (1) 

Met?

Test (2) 

Met?

Payroll $19.271 $0.002 0.0085% No No

Travel $0.587 $0.000 0.0000% No No

Administrative Expenses:

 Government Vendors $4.973 $0.000 0.0000% No No

 Commercial Vendors $3.109 $0.000 0.0000% No No

FMC $27.411 $0.002 0.0060% No No

Significant improper payments are defined as gross annual improper payments (i.e., the total amount of 

overpayments and underpayments) in the program exceeding:

Test (1) both 1.5 percent of program outlays and $10,000,000 of all program or activity payments made during 

the fiscal year reported, or 

Test (2) $100,000,000 (regardless of the improper payment percentage of total program outlays)

*Previous years PARs reported values at the dollar level.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 66

The FMC’s authorized budget for FY 2020 was $28.0 million. Obligations against the FMC’s 

appropriation totaled $27.411 million, representing 97.9 percent of the funding level. The 

largest annual disbursements were related to salaries and benefits and represent 68.8 percent 

of the annual budget. The next largest allocation of funds, 29.1 percent, was for administrative 

expenses which include the GSA rent, utilities, communications, and IT services and equipment. 

Based on the results of testing a sample of transactions, our assessment of risk factors, and our 

reliance on internal controls, including an appropriate segregation of duties, performed at both 

the service provider level and FMC, we have determined that no FMC programs or activities 

were susceptible to significant erroneous payments in FY 2020. The following chart denotes 

the FMC’s qualitative risk assessmentfor FY 2020.

Fiscal year 2020 Systematic Method

Qualitative Risk Assessment Questionnaire

Payment Activities ($M) Assessment Summary Overall Payroll Admin* Travel Purchase 

Card*

Total Fiscal Year Payments $27.4 $19.3 $7.9 $0.06 $0.2

Risk (High, Medium, or Low) Low Low Low Low Med

Total Risk Score 11.0 12.0 10.0 9.0 13.0

Criteria Criteria Score

Is the program new? 1.3 1.0 1.0 1.0 2.0

Is the process to determine correct payment 

amounts complex? 1.3 1.0 1.0 1.0 2.0

Is there a high volume of payments? 1.8 3.0 1.0 1.0 2.0

Are payments or eligibility decisions made outside 

the agency (i.e., state or local governments or 

regional Federal field office)?

1.0 1.0 1.0 1.0 1.0

Have there been recent changes in program 

funding, authorities, practices or procedures? 1.5 2.0 1.0 1.0 2.0

Are the personnel responsible for making program 

eligibility determinations or certifying that 

payments are accurate inexperienced or lacking in 

training?

1.3 1.0 2.0 1.0 1.0

Are there any programs that pose an inherent risk 

due to the nature of the program? 1.0 1.0 1.0 1.0 1.0

Are there significant deficiencies in the audit 

reports of the agency that might hinder accurate 

payment certification?

1.0 1.0 1.0 1.0 1.0

Are there any indicators from prior years' 

improper payment work that would indicate 

potential risk?

1.0 1.0 1.0 1.0 1.0

*Administrative payment activities are predominantly via commercial invoices and intra-governmental 

payments. Purchase card payments are made using the government credit card account.

Total Risk

Score: 

Low

Medium

High

8-12

13-20

21-24

Criteria 

Scoring:

Low Risk

Medium Risk

High Risk

1

2

3
FMC FISCAL YEAR 2020| Performance and Accountability Report| 67

We are confident that the FMC has an efficient and effective process which provides a 

reasonable assurance that payments are made for legitimate and proper expenses incurred by

the FMC. The FMC maintains a very low erroneous payment percentage and strives to reduce 

payment errors by continuously reviewing, monitoring, and evaluatingour programs and 

activities.

The FMC has not identified any program that constitutes a high-risk for improper payments. 

Therefore, the FMC considers all payments to fall within the realm of low risk. 

The National Finance Center (NFC) became the agency’s payroll provider in 2002 and is 

responsible for monitoring and reporting all 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 2020, the 

FMC processed one overpayment. The FMC did not identify any improper collections through 

the Intergovernmental Payments and Collections (IPAC). Efforts to recover the overpayment are 

in process.

Payment Reporting. As described in the preceding discussion and charts, the FMC used the 

post-payment audit results performed by our financial services provider and the FMC’s own 

internal post-payment audits. The combined audits identified one improper payment for $1,635

in its payroll payment activity within its Operations and Administration (O&A) program. This 

produces an improper payment rate for O&A of 0.009% and an overall FMC rate of 0.006%.

Recapture of Improper Payments Reporting and Auditor Recommendations. The FMC will 

continue to effectively monitor all payments, commercial and intra-governmental,to affect a 

zero-dollar improper payment rate. The FMC currently has no recommendations from itsOIG, 

who reviews the agency’s compliance with reporting and performance requirements regarding 

improper payments.

Agency Improvement of Payment Accuracy with the Do Not Pay (DNP) Initiative. The table 

below represents the improper payments made by the FMC in FY 2020 with percentage 

forecasts through FY 2023. The FMC utilizes the DNP services of its financial services provider, 

the U.S. Treasury’s Bureau of Fiscal Service. In FY 2020, the BFS DNP services effectively helped 

the FMC avoid making any improper payments to entities identified in the DNP database. 

Therefore, the FMC will strive to maintain a zero-dollar improper payment rate.

Improper Payments (IP) Information Act Reduction Outlook FY 2020-2023

(millions)

Program FY 20 IP 

Outlays

FY 20

IP %

FY 21

IP $

FY 21

%

FY 22

%

FY 23

%

Inspector General $0.000 0.000 $0.00 0.00 0.00 0.00

Operational and Administrative $0.002 0.009 $0.00 0.00 0.00 0.00

FMC $0.002 0.006 $0.00 0.00 0.00 0.00

Barriers. There are no statutory or regulatory barriers that limit the agency’s ability to take 

corrective actions to address any improper payments.

Accountability. 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 the Commission’s OBF electronically for internal processing and payment 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 68

authorization. When an invoice is received, it is first verified as a valid invoice belonging to the 

agency. OBF matches the invoice to documentation provided by the Contracting Officer’s 

Representative (COR) indicating that goods/services have been received by the Commission and 

approves the invoice for payment. BFS is advised of the purchase order the invoice is being 

paid against and the payment amount. OBF also ensures that sufficient funds have been 

obligated to make the payment and provides BFS with the period of performance. Once OBF 

staff has processed the payment authorization, the payment information is verified by a second 

OBF staff member. At that point, the invoice is electronically returned to BFS for processing. 

When the payment is loaded into the financial 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.

The Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible for the 

efficient and effective utilization of spending authority granted the agency by Congress. The 

Chairman has delegated administrative funds control to the Director, OBF. The Director, OBF, 

has the responsibility to ensure that disbursements made by BFS on behalf of the FMC are 

legitimate expenses of the Commission and that sufficient funds are 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.

Agency Information Systems and Other Infrastructure.

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 U.S Treasury’s BFS .

In its FY 2021 budget, the FMC requested funding to maintain the inter-agency agreement

between the FMC and BFS for financial support and access to its financial system.

FRAUD REDUCTION REPORT

The FMC has a low appetite for fraud. The FMC complies with the Fraud Risk and Data 

Analytics Act of 2015 and follows the Standards for Internal Control in the Governmentthrough 

its enterprise risk management program and financial accounting practices. The FMC’s Risk 

Committee, managing risk enterprise-wide, considers fraud risks on a regular basis. 

Financial stewardship is an important part of the FMC’s risk management strategy. Internal 

controls and financial and accounting data are subject to multiple levels of monthly and/or 

annual review performed internally by the FMC and externally by the BFS. The most recent IG 

risk assessment of the purchase card program, completed in 2019, considered several factors, 

including: effectiveness of internal controls; training requirements; policies and procedures; 

any prior problems with the program; and previous audits and reviews. The OIG concluded the 

risk of illegal, improper, or erroneous use in the FMC’s purchase card program is “low,” and as a 

result, an OIG audit or review of the agency’s purchase card program was not planned for 2020.

The Commission has financial and administrative controls in place, including an internal 

controls policy which provides management and internal control processes for identifying and 

addressing major performance and management challenges and areas at greatest risk of fraud, 

waste, abuse and mismanagement. In 2020, the FMC’s OIG, with the assistance of independent 
FMC FISCAL YEAR 2020| Performance and Accountability Report| 69

financial auditors, completed a review of the Commission’s administrative control of funds. The

Management Letter on Administrative Control of Funds, A-20-02a, determined that the 

Commission has an internal control system in place for its funds control and recommended 

additional opportunities to further strengthen the agency’s controls. The Commission’s 

administrative control of funds policy is in the process of being updated to include those 

recommendations. 

In addition, the Commission’s acquisitions policy protects the integrity of the contracting 

process, and includes ethical requirementsand standards of conductin accordance with the 

Procurement Integrity Act and Federal Acquisition Regulations.

The FMC does not oversee or have responsibility for any credit, grant, or loan programs. No 

new programs were initiated in FY 2020, and no current programs are at high risk for fraud, 

abuse, or exposure to waste.
FMC FISCAL YEAR 2020| Performance and Accountability Report| 70

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 104-410, as amended by the 

Debt Collection Improvement Act of 1996, Pub. L. 104-134, and the Federal Civil Penalties 

Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, requires agencies to make 

regular and consistent inflationary adjustments of civil monetary penalties to maintain their 

deterrent effect. Below are the civil penalties that the FMC may impose, authority for imposing 

the penalty, dates ofinflation adjustments, and current penalty levels. The Federal Register 

notice (85 FR 1760) may be viewed at:

https://www.federalregister.gov/documents/2020/01/13/2020-00294/inflation-adjustment-ofcivil-monetary-penalties

Penalty Statutory 

Authority

Date of Previous 

Adjustment

Date of Current 

Adjustment

Maximum 

Penalty

Adverse impact on U.S. carriers by foreign 

shipping practices 46 U.S.C. 42304 January 15, 2019 January 15, 2020 $2,140,973

Knowing and Willful violation / Shipping 

Act of 1984, or Commission regulation or 

order

46 U.S.C. 41107(a) January 15, 2019 January 15, 2020 $61,098

Violation of Shipping Act of 1984, 

Commission regulation or order, not 

knowing and willful

46 U.S.C. 41107(b) January 15, 2019 January 15, 2020 $12,219

Operating in foreign commerce after tariff 

suspension 46 U.S.C. 41108(b) January 15, 2019 January 15, 2020 $122,197

Failure to provide required reports, etc. / 

Merchant Marine Act of 1920 46 U.S.C. 42104 January 15, 2019 January 15, 2020 $9,639

Adverse shipping conditions / Merchant 

Marine Act of 1920 46 U.S.C. 42106 January 15, 2019 January 15, 2020 $1,927,676

Operating after tariff or service contract 

suspension / Merchant Marine Act of 1920 46 U.S.C. 42108 January 15, 2019 January 15, 2020 $96,384

Failure to establish financial responsibility 

for non-performance of transportation* 46 U.S.C. 44102 January 15, 2019 January 15, 2020 $24,346$812

Failure to establish financial responsibility 

for death or injury* 46 U.S.C. 44103 January 15, 2019 January 15, 2020 $24,346$812

Program Fraud Civil Remedies Act / makes 

false claim

31 U.S.C. 

3802(a)(1) January 15, 2019 January 15, 2020 $11,665

Program Fraud Civil Remedies Act / giving 

false statement

31 U.S.C. 

3802(a)(2) January 15, 2019 January 15, 2020 $11,665

*These amounts are based on the penalties established in § 44104 for violations of §§ 44102 and 44103: $5,000, 

plus $200 for each passage sold. These penalties were established in 1966 and, applying the statutory inflation 

adjustment formula, amount to $24,346, plus $812 for each passage sold, in current dollars. 

BIENNIAL REVIEW OF USER FEES

Agencies are required by the Chief Financial Officers Act of 1990 to conduct biennial reviews of 

fees and other charges that they impose, and to revise these fees and charges to cover program 

and administrative costs incurred, as necessary. The Commission voted to update user fees and 

notice will be published in the fourth quarter of CY 2020. User fee rates will next be examined

in CY 2022.