Product/Service 

Information

Office of Inspector General 

Semiannual Report to Congress
 

Covering the Period
 

April 1, 2016 – September 30, 2016
 

FEDERAL MARITIME COMMISSION
 
 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

October 28, 2016 

Office of Inspector General 

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

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

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

(OIG) for the period April 1, 2016 to September 30, 2016. 

During part of this reporting period, the OIG was pleased to welcome two full-time summer 

auditor interns. Mr. Michael Maykish, an Accounting student from Old Dominion University, and 

Mr. Andrew Snyder, an Accounting student from the University of Virginia, assisted the OIG 

complete several projects during the summer of 2016. 

During the reporting period, the OIG completed a DATA Act Readiness Review, 

Cybersecurity Review, and an audit peer review of another Federal OIG, among other projects. In 

addition, two assignments were in progress during the reporting period: the annual independent 

audit of the FMC’s financial statements, and the annual Federal Information Security Management 

Act (FISMA) evaluation. These assignments are discussed in more detail in the enclosed report. 

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

leadership and staff. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

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Table of Contents

Transmittal Letter
 

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

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

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

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

Completed Reviews .................................................................................................................................................. 3
 

Open Audit and Evaluation ....................................................................................................................................... 5
 

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

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

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

Peer Review .............................................................................................................................................................. 6
 

Memorandum of Understanding.............................................................................................................................. 6
 

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

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities...................................................... 7
 

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

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

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

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

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

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

Pictured: PortMiami, Miami, Florida
	 	

 

 

	 	

EXECUTIVE SUMMARY
 

This semiannual report summarizes the activities and accomplishments of the Federal 

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

period April 1, 2016 through September 30, 2016. The most significant activities of the OIG 

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

be found in subsequent sections of this report. 

During this reporting period, the OIG completed several reviews, including a DATA Act 

Readiness Review, a Cybersecurity Review, and an audit peer review of another federal OIG. In 

addition, the OIG had one audit and one evaluation in-progress during the period. Specifically, 

the annual financial statement audit (A17-01) and evaluation of the FMC’s compliance with the 

Federal Information Security Management Act (A17-02) are expected to be completed in 

November 2016. All of these assignments are discussed in more detail later in this report. 

During the period, the OIG received three new hotline complaints. The OIG performed 

preliminary inquiries on three complaints; however, the OIG found no evidence of misconduct and 

the complaints were closed. There were no new investigations or matters referred to prosecutorial 

authorities during this period. At the end of this reporting period, four hotline complaints were 

pending and there were no investigations open. 

FEDERAL MARITIME COMMISSION

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

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

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

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

of the Merchant Marine Act of 1920. 

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

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

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

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

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

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

OFFICE OF INSPECTOR GENERAL

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

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

reports to the FMC Commissioners and Congress. The OIG is responsible for conducting audits 

and investigations relating to the programs and operations of the FMC. Audits are conducted for 

the purpose of finding and preventing fraud, waste and abuse, and promoting economy, efficiency 

and effectiveness within the agency. The OIG investigations seek out facts related to allegations 

of wrongdoing on the part of FMC employees and individuals, or entities contracting with, or 

obtaining benefits from, the agency. The IG Act provides that the OIG shall have access to all 

agency records and may subpoena records from entities outside of the agency in connection with 

an audit or investigation. 

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

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

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

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

independence of the OIG. 

To aid the FMC in accomplishing its 

mission, the OIG is provided two full-time 

positions, the IG and an auditor. During this 

reporting period, the OIG’s one auditor position 

was vacant. During this semiannual period, the 

OIG was pleased to welcome two full-time auditor 

interns in the summer of 2016: Mr. Michael 

Maykish (left in the picture), an Accounting student 

from Old Dominion University; and Mr. Andrew Snyder (right in the picture), an Accounting 

student from the University of Virginia. 

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Mr. Maykish is a third year Accounting and Criminal Justice student at Old Dominion 

University’s Strome College of Business, and has an interest in studying white collar crime. During 

sophomore year, he was elected to, and ran Old Dominion’s Undergraduate Association for 

Sociology and Criminal Justice. During the summer of 2016, Mr. Maykish was responsible for 

assisting the OIG: oversee the 2016 financial statement audit; conduct the DATA Act Readiness 

Review; and finalize the OIG’s risk assessment of agency programs and activities; among other 

projects. 

Mr. Snyder is a third year Accounting student at the University of Virginia’s McIntire 

School of Commerce, who has a strong interest in tax, international accounting, and accounting 

for publically traded entities. He is the Treasurer of the McIntire School’s Accounting Society, 

and served on the Sustainability Committee for UVA’s Net Impact Organization. For his term, Mr. 

Snyder assisted the OIG: oversee the 2016 FISMA information technology evaluation; conduct 

the OIG’s audit peer review of the Election Assistance Commission OIG; and redesign the OIG’s 

website; among other projects. 

In addition to their work assignments, Mr. Maykish and Mr. Snyder had the opportunity to 

visit the Federal Deposit Insurance Corporation (FDIC) and the Department of Health and Human 

Services (HHS) IG offices, along with the Special Inspector General for Afghanistan 

Reconstruction (SIGAR), where they learned about the important work of these organizations. Mr. 

Maykish and Mr. Snyder met with OIG professionals involved in government accounting, forensic 

auditing, and federal law enforcement. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Reviews

In September 2016, the OIG completed a DATA Act Readiness Review, assignment A16-

03. The objective of this readiness review was to gain an understanding of the processes, systems 

and controls which the FMC has implemented, or plans to implement, to report federal agency 

expenditures and link federal spending information in accordance with the requirements of the 

DATA Act. This understanding is necessary for the OIG to develop an informed methodology for 

the future OIG reviews required by the DATA Act. 

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The Digital Accountability and Transparency Act of 2014 (DATA Act) was enacted May 

9, 2014 and, among other things, requires that federal agencies report financial and payment data 

in accordance with data standards established by the Department of Treasury (Treasury) and the 

Office of Management and Budget (OMB). The data reported will be displayed on a website 

available to taxpayers and policy makers. In addition, the DATA Act requires that agency OIGs 

review statistical samples of the data submitted by the agency under the DATA Act and report on 

the completeness, timeliness, quality and accuracy of the data sampled and the use of the data 

standards by the agency. 

The OIG’s DATA Act Readiness Review focused on the first four steps of the agency 8-

step plan based on OMB Memorandum M-15-12, Increasing Transparency of Federal Spending 

by Making Federal Spending Data Accessible, Searchable, and Reliable, May 8, 2015. Overall, 

the OIG’s review found the FMC had not completed, or only partially completed, some of the first 

four steps of the agency 8-step plan. While the OIG recognizes the FMC is largely relying on the 

implementation efforts of the Bureau of the Fiscal Service (BFS), the OIG concluded the FMC 

should be more actively engaged in the overall implementation of the DATA Act requirements. 

The OIG’s report contained four suggestions for improvement. 

Prior to the release of the final report, the agency generally adopted all four of the OIG 

suggestions. The agency updated and improved their DATA Act implementation plan, better 

defined the FMC working group responsible for the DATA Act, and appointed a new DATA Act 

Senior Accountable Official with the ability to coordinate efforts across multiple offices. 

In August 2016, the OIG completed a Cybersecurity Review, A16-04. The Consolidated 

Appropriations Act, 2016, signed into law on December 18, 2015, required this review on the 

agency’s cybersecurity practices. Specifically, the Cybersecurity Act of 2015, required all IGs of 

agencies operating national security systems, or federal computer systems that provide access to 

personally identifiable information (PII), to report to Congress regarding their agencies' 

cybersecurity practices. The FMC does not operate a national security system; however, one of 

the three major FMC computer systems does provide access to PII. 

In order to complete the review, the OIG inquired with the agency and relied on their 

representations, except as it related to a determination on whether the agency is following 

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appropriate logical access standards. The OIG relied on testing from the fiscal year (FY) 2016 

Federal Information Security Management Act (FISMA) Evaluation to assess the logical access 

standards. The OIG reported the results of the review to the agency; and the appropriate 

committees of jurisdiction in the Senate and the House of Representatives. The OIG generally 

found the agency is following appropriate logical access standards. The OIG identified two issues 

requiring improvement and communicated these two issues to the agency. As a result of the OIG 

review, the agency implemented corrective action. 

Open Audit and Evaluation 

Independent Auditors’ Report of FMC’s FY 2016 Financial Statements. The audit 

objectives are to opine on whether the FMC’s FY 2016 financial statements follow U.S. Generally 

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

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

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

30, 2016 and 2015, and the related Statements of Net Cost, Statements of Changes in Net Position, 

Statements of Budgetary Resources and Statements of Custodial Activity. 

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

Act (FISMA) FY 2016. The objectives of the independent evaluation of the FMC’s information 

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

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

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

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

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

Hotline and Investigations

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

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

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

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

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

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During the period, the OIG received three new hotline complaints. The OIG performed 

preliminary inquiries on three complaints; however, the OIG found no evidence of misconduct and 

the complaints were closed. There were no new investigations or matters referred to prosecutorial 

authorities during this period. At the end of this reporting period, four hotline complaints were 

pending and there were no investigations open. 

OTHER ACTIVITIES

OIG Follow‐Up

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

recommendations from the Evaluation of the Federal Maritime Commission Workplace, A15-

04. The OIG reviewed the agency’s actions taken to address the outstanding recommendations 

and determined the actions were adequate. As a result, all six of the recommendations from this 

2015 evaluation have been implemented by the agency and are closed. 

Follow-up for the OIG’s Review of FMC’s User Fee Calculations, OR10-03, revealed the 

agency has implemented the outstanding recommendation related to user fees. Specifically, 

effective October 1, 2016, the agency amended its user fees for various transactions and services. 

There are no outstanding recommendations from this review. 

Peer Review

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

three years. These reviews are to be performed only by federal auditors. The objectives of a peer 

review are to determine, for the audit function, whether an effective quality control system has 

been established in the office and if policies, procedures and applicable government auditing 

standards are being followed. During this reporting period, the OIG conducted an audit peer 

review of the Election Assistance Commission OIG and issued a peer review report on July 20, 

2016. Please see appendix A for additional information. 

Memorandum of Understanding

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

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

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

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

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

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

Review of Legislation

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

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

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

operations; and (2) contains adequate internal controls to prevent and detect fraud, waste, and 

abuse. 

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

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

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

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

agencies; and 

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

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

workforce in the Office of Inspectors General. 

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

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

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

monthly CIGIE meetings and periodically assists CIGIE on special projects. 

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

Investigations Committees. The Audit Committee is responsible for coordinating governmentwide activities that promote economy and efficiency in federal programs and operations, and to 

address areas of weakness and vulnerability with respect to fraud, waste, abuse, and 

mismanagement. The Audit Committee serves as a resource for the federal audit community, 

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maintains professional audit standards, and develops auditor training requirements. The mission 

of the Investigations Committee is to advise the IG community on issues involving investigations, 

investigative personnel, and establishing investigative guidelines. 

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SUMMARY	 	 OF INSPECTOR	 	 GENERAL REPORTING REQUIREMENTS
 

IG Act Reference Reporting Requirement Pages 

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

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

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

problems, abuses, or deficiencies 

None 

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

corrective actions have not been completed 

10 

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

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

refused 

None 

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

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

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

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

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

period for which no management decision was made 

by the end of the reporting period 

None 

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

management decisions 

None 

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

inspector general disagrees 

None 

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

Management Improvement Act (FFMIA) of 1996 

None 

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

Section 5(a)(16) Peer review activity by FMC OIG on another OIG 13, App. A 

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

than 6 Months

Recommendations 

Report Title Report 

Number 

Issue 

Date Number Open Closed 

FY 2015 Implementation 

of FISMA 

A16-02 11/12/15 9 3 6 

TABLE II ‐		Listing of Reports Issued

Report Title Assignment Issue Questioned Unsupported Funds Put to 

Number Date Costs Costs Better Use 

DATA Act Readiness Review A16-03 9/16/16 $0 $0 $0 

Cybersecurity Review A16-04 8/12/16 $0 $0 $0 

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TABLE III ‐		Reports	 	 with Questioned	 	 Costs

Number 

of 

Reports 

Questioned 

Costs 

Unsupported 

Costs 

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0 

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

Subtotal (A + B) 0 $0 $0 

C. For which a management decision was made 

during the reporting period. 

0 $0 $0 

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

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

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0 

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0 

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TABLE IV ‐		Recommendations that Funds be Put to Better Use

Number 

of 

Reports Dollar Value 

A. For which no management decision has been made 

by the commencement of the reporting period. 0 $0 

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

Subtotal (A + B) 0 $0 

C. For which a management decision was made during 

the reporting period. 0 $0 

 (i) dollar value of recommendations that were 

agreed to by management; and 

0 $0 

 (ii) dollar value of recommendations that were not 

agreed to by management. 

0 $0 

D. For which no management decision has been made 

by the end of the reporting period. 0 $0 

E. Reports for which no management decision was 

made within six months of issuance. 0 $0 

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Appendix A ‐		Peer Review Activity

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

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

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

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

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

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

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

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

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

During this reporting period, the OIG conducted an audit peer review of the Election 

Assistance Commission (EAC) OIG and issued a peer review report on July 20, 2016. The FMC 

OIG issued a modified peer review report to the EAC OIG, and the peer review report contained 

no recommendations. 

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HOTLINE COMPLAINTS 

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

depends on the cooperation of FMC employees and the public. 

Employees and the public are encouraged to contact the OIG regarding

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

programs and operations.

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

(202) 523‐5865

ONLINE COMPLAINT FORM:

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO:

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

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

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR

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

ADDITIONAL INFORMATION.

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