Office                of Inspector Inspector General General
 

Semiannual Report 


to the Congress 


Covering the Period 

April 1, 2012 — September 30 2012 

FEDERAL MARITIME COMMISSION 

FEDERAL MARITIME COMMISSION

Washington, DC 20573 

October 29, 2012 

Office of Inspector General

Dear Chairman Lidinsky and Commissioners: 

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

Act of 1978, as amended. It summarizes the activities of the Office of Inspector General (OIG) 

for the period April 1, 2012, to September 30, 2012. The Act requires that you transmit the 

report to the appropriate Congressional committees within 30 days of receipt. Your transmittal 

should also include any comments you consider appropriate and other statistical tables and 

reports required by law. 

During this period we issued one evaluation of an FMC operation, began three other 

audits / evaluations and commenced planning for a fourth evaluation. Also during the reporting 

period, the OIG processed five hotline complaints. The OIG opened one investigation and 

referred one matter to prosecutorial authorities. 

In addition to these audit and investigative activities and outcomes, the OIG responded to 

two congressional inquiries for information and three Freedom of Information Act requests from 

the public. We continued to respond to consumers who were victimized as part of an internet 

scam operation using FMC indicia and worked with the agency’s Office of the General Counsel 

to issue Commission regulations pertaining to IG reporting requirements as required by the 

Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203). 

As of September 30, 2012, there were 14 recommendations between 22 and 78 months 

old. The oldest recommendation, to implement a paperless bill-paying process, is a “green” 

alternative to the current paper based process that would be more efficient for agency staff and 

its customers. 

I look forward to working with you in our ongoing efforts to promote economy and 

efficiency in agency programs. 

 

 Respectfully submitted, 

 /Adam R. Trzeciak/ 

 Inspector General 
TABLE OF CONTENTS 

Transmittal Letter 

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

BACKGROUND ............................................................................................................................ 1

AUDITS/EVALUATIONS............................................................................................................. 3

Summary of Audits and Reviews Issued During the Current Period ......................................... 3

Draft Audits or Reviews ............................................................................................................. 4

Reports with Fieldwork in Progress ............................................................................................ 4

Planned Audits or Reviews ......................................................................................................... 5

INVESTIGATIVE ACTIVITIES ................................................................................................... 5

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

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS .......................... 12

TABLE I - Inspector General Issued Reports with Questioned Costs...................................... 13

TABLE II –Inspector General Issued Reports with Recommendations that Funds be Put to 

Better Use ............................................................................................................ 14
April 1, 2012 – September 30, 2012 Page 1 

EXECUTIVE SUMMARY

This Semiannual Report to the Congress summarizes the activities and accomplishments 

of the Federal Maritime Commission (FMC or Commission), Office of Inspector General (OIG) 

for the period April 1, 2012 through September 30, 2012. During this period we issued one 

evaluation of an FMC operation, began three other audits / evaluations and commenced planning 

for a fourth evaluation. 

 During this reporting period, the OIG received five complaints. We responded to two of 

the complaints and forwarded three complaints to the appropriate FMC program areas for 

disposition or to other agency OIGs or programs with jurisdiction over the subject matter of the 

complaint. The OIG opened one investigation and referred one matter to prosecutorial 

authorities during this period. 

In addition to these audit and investigative activities and outcomes, the OIG responded to 

two congressional inquiries for information and responded to three Freedom of Information Act 

requests from the public. We continued to respond to consumers who were victimized as part of 

an internet scam operation using FMC indicia and worked with the agency’s Office of the 

General Counsel to issue Commission regulations pertaining to IG reporting requirements as 

required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-

203). 

BACKGROUND

The FMC is an independent 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. 
April 1, 2012 – September 30, 2012 Page 2 

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

the Senate, each serving five-year terms. For FY 2012, the Commission was appropriated $24.1 

million and is authorized 132 full-time equivalent positions. 

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

Commission also maintains a presence in Los Angeles, Seattle, New York, New Orleans, 

Houston, and South Florida through area representatives who serve the major ports and 

transportation centers within their respective geographic areas. In addition, one at-large area 

representative operates from Washington, D.C. 

The FMC/OIG was established in 1989 by the Inspector General Act of 1978, as 

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

inspector general (IG) who reports directly to the FMC Commissioners. To aid the FMC in 

accomplishing its mission in FY 2012, the OIG is provided three full-time staff and a budget of 

$727,322. 

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. 

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

employees and individuals, or entities contracting with, or obtaining benefits from, the agency. 

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

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

The IG is required by law to prepare a 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 appropriating 

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

of the OIG. 
April 1, 2012 – September 30, 2012 Page 3 

AUDITS/EVALUATIONS

During this semiannual period, the OIG issued one evaluation of the agency lease of its 

vehicle. We also began audits of the FMC’s financial statements and its transit subsidy program, 

and began a program evaluation of information security pursuant to the Federal Information 

Security Management Act. Details on these audits and evaluations are provided below. 

Issued Audits and Reviews

Audit Report Number Subject of Audit

OR12-02 FMC Controls over the Procurement, Lease and 

Use of the Agency Vehicle 

Summary of Audits and Reviews Issued During the Current Period

 In OR12-02, FMC Controls over the Procurement, Lease and Use of the Agency 

Vehicle, the objectives were to assess compliance with Federal regulations pertaining to the 

procurement of the agency’s leased vehicle by FMC staff and determine whether controls are in 

place to provide reasonable assurances that the vehicle is being properly used. 

 We found that the agency did not comply with General Service Administration 

requirements regarding vehicle size and fuel efficiency when procuring the vehicle, and 

Executive Orders pertaining to work to home prohibitions and website reporting requirements. 

The OIG noted a $100 reduction in monthly local travel cost but not enough to offset fully 

loaded lease costs of approximately $1,500. Further, 91 percent of the recorded trips were made 

with three or less employees in a vehicle that seats eight passengers. 

 Importantly, our analysis was based on incomplete records. The log used to record trips 

was missing approximately half of the vehicle miles appearing on the vehicle’s odometer. 

The OIG made four recommendations to address the noted deficiencies, and identified the need 
April 1, 2012 – September 30, 2012 Page 4 

to reassess whether an eight passenger SUV is needed to accomplish the agency’s mission, given 

usage records and budgetary constraints. 

Draft Audits or Reviews

The OIG issued draft audit report A13-01, Audit of the FMC Transit Benefit Program,

to management for comment in September, 2012. The objectives of the audit were to determine 

whether there are controls in place to monitor the transit subsidy program and whether 

employees are adhering to Commission policy and program guidelines. Management comments 

are due on October 26, 2012 and the report will be issued immediately thereafter. 

Reports with Fieldwork in Progress

In A13-XX, Audit of FMC’s FY2012 Financial Statements, the audit objectives are to 

opine on whether the FMC’s FY 2012 financial statements follow Generally Accepted 

Accounting Principles and present fairly the financial position of the agency. The OIG will also 

review internal controls over financial reporting and agency compliance with laws and 

regulations. The statements to be audited are the Balance Sheets as of September 30, 2012 and 

2011, and the related Statements of Net Cost, Statements of Changes in Net Position, Statements 

of Budgetary Resources and Statements of Custodial Activity. This will be the ninth consecutive 

year that the FMC prepared financial statements for audit. 

The OIG will also prepare a Management Letter that presents findings arising from the 

review of the statements that are not material to the financial statements in the current year, but if 

not addressed, could materially affect future statements. 

In A13-XX, Independent Evaluation of FMC’s Implementation of the Federal 

Information Security Management Act (FISMA) for FY 2012, the objectives are to (1) evaluate 

the agency’s information systems security program and assess compliance with FISMA and 

related information security policies, procedures, standards and guidelines; (2) evaluate 
April 1, 2012 – September 30, 2012 Page 5 

responses to prior recommendations, (3) perform a vulnerability assessment of the FMC network 

using scanning tools from inside the FMC domain; and (4) review agency activities associated 

with its responsibilities under the Privacy Act. This year the OIG will issue an independent 

evaluation of the agency’s information security program and submit a report to the Office of 

Management and Budget in response to specific security-related questions provided to all federal 

departments and agencies subject to FISMA. We will provide the results of the internal scan to 

OIT management for remediation and issue a Privacy Act assessment report. 

In A13-XX, Review of Expenditures for Personal Furnishings by the FMC Chairman, 

the objective is to assess compliance with Sec. 711 of P.L. 111-8, as amended, the Omnibus 

Appropriations Act of 2009, that prohibits presidential appointees from obligating or expending 

funds in excess of $5,000 to furnish or redecorate their offices over the life of their appointment. 

Planned Audits or Reviews

In A13-XX, Audit of the DataWatch Systems Physical Security, the OIG will assess 

program costs, FMC oversight and how the agency compiles and uses information generated by 

the data watch card readers. 

INVESTIGATIVE ACTIVITIES 

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. Matters of possible wrongdoing are referred to 

the OIG in the form of allegations or complaints from a variety of sources, including FMC 

employees, other government agencies and the general public. During this reporting period, the 

OIG received five hotline complaints. We responded to two of the complaints and forwarded 

three complaints to the appropriate FMC program areas for disposition. The OIG opened one 

new investigation and referred one matter to prosecutorial authorities during this period. 
April 1, 2012 – September 30, 2012 Page 6 

Additionally, the OIG continues to work with the agency’s Office of the General Counsel 

concerning an ongoing internet scam that attempts to defraud the public by, among other things, 

using the agency’s official insignia to add legitimacy to correspondence with the targeted public. 

OTHER OIG ACTIVITIES

Review of Legislation

As required by the Inspector General Act of 1978, as amended, the Office of Inspector 

General 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 and abuse. 

Council of Inspectors General on Integrity and Efficiency Activities

The Council of Inspectors General on Integrity and Efficiency (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 (designated federal entities). The OIG 

remains active in CIGIE operations. For example, the IG is a member of both the Legislation and 

Integrity Committees. The Legislation Committee is a centralized point-of-contact and liaison for 

CIGIE to ensure regular and ongoing communication with Congressional committees, committee 

staff and the Government Accountability Office, regarding issues of common interest, and 
April 1, 2012 – September 30, 2012 Page 7 

provides input to, and receives feedback from, the Congress on legislation affecting the IG 

community as a whole. The Integrity Committee is charged with receiving, reviewing, and 

referring for investigation, where appropriate, allegations of administrative (non-criminal) 

misconduct against inspectors general and designated senior staff members of the OIG. The 

Committee’s membership consists of the Federal Bureau of Investigation’s representative to the 

CIGIE, who serves as its chairperson; the Special Counsel, Office of Special Counsel; the 

Director of the Office of Government Ethics; and four federal inspectors general. The IG also 

continued to participate in quarterly meetings with other Designated Federal Entity OIGs to 

discuss issues, outcomes and solutions endemic to smaller IG offices. 

The Assistant Inspector General participates in Federal Audit Executive Council (FAEC) 

activities. The FAEC is comprised of senior audit staff from agency OIGs that discuss and 

coordinate issues affecting the federal audit community -- with special emphasis on audit policy 

and operations of common interest to FAEC members. The Counsel to the Inspector General 

participates in the Council of Counsels to the Inspector General (CCIG) activities. The CCIG 

consists of senior counsel from agency OIGs who discuss various legal issues that affect the OIG 

community. 

During this semiannual period, the OIG did not review legislation impacting the FMC; 

however, we did review and comment on IG community-related legislation and other proposals 

with a direct impact on office of inspectors general operations. We also worked with the 

agency’s Office of the General Counsel to revise and issue Commission regulations pertaining to 

OIG reporting responsibilities. 

During the reporting period, the OIG assisted two sister OIGs in providing audit report 

quality control. 

Peer Review Activities

Federal Offices of Inspector General are required by the IG Act to have a peer review 

performed once every three years. These reviews are to be performed only by federal auditors. 
April 1, 2012 – September 30, 2012 Page 8 

A committee of the CIGIE schedules the review to ensure that resources are available to perform 

them and that OIGs do not conduct reciprocal reviews. 

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

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

applicable government auditing standards are being followed. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Public Law 

111-203, requires federal offices of inspectors general to include in their semiannual reports to 

Congress an appendix containing the results of any peer review conducted by another OIG 

during the reporting period, or, if no peer review was conducted within that reporting period, a 

statement identifying the date of the last peer review conducted by another OIG. The most 

recent peer review of the FMC OIG was issued on March 12, 2010, outside of this reporting 

period. There are no unimplemented recommendations from this or any previous peer review. 

The OIG is currently coordinating with a sister OIG to perform our next peer review, which will 

be completed prior to the end of the next reporting period. The March 2010 peer review opinion 

is available at www.fmc.gov/bureaus_offices/office_of_inspector_general.aspx. 

Significant Management Decisions

If the IG disagrees with any significant management decision, Section 5(a)(12) of the 

Inspector General Act requires that such disagreement be reported in the semiannual report. 

Further, Section 5(a)(11) of the Act requires that any decision by management to change its 

response to a significant resolved audit finding must also be disclosed in the semiannual report. 

For this reporting period, there were no significant management decisions made on which 

the IG disagreed, and management did not revise an earlier decision on an OIG audit 

recommendation.

Access to Information

The IG is to be provided with ready access to all agency records, information, or 

assistance when conducting an investigation or audit. Section 6(b)(2) of the IG Act requires the 
April 1, 2012 – September 30, 2012 Page 9 

IG to report to the agency head, without delay, if the IG believes that access to required 

information, records or assistance has been unreasonably refused or otherwise has not been 

provided. A summary of each report submitted to the agency head in compliance with Section 

6(b)(2) must be provided in the semiannual report in accordance with Section 5(a)(5) of the Act. 

During the reporting period, the OIG did not encounter any difficulties in obtaining 

assistance or access to agency records. Consequently, no report was issued by the IG to the 

agency head in accordance with Section 6(b)(2) of the IG Act. 

Audit Resolution

As of the end of this reporting period, all OIG audit recommendations for reports issued 

in prior periods have been resolved. That is, management and the OIG have reached agreement 

on what actions need to be taken. As noted below, 14 of these recommendations remain open 

past one year. Importantly, all recommendations below were identified in the prior semiannual 

report as “unimplemented over one year old.” Management has made little progress to address 

them. 

Short Title Report 

Issue 

Date 

Open 

Rec’s 

Elapsed Months 

(as of 9/30/12) 

1. FY 2010 Management Letter 11/10/10 3 22 

2. Helpdesk Satisfaction Survey 8/6/10 4 25 

3. User Fee Calculations 5/27/10 1 28 

4. T&A – Capping Report 5/14/10 2 28 

5. FISMA Evaluation for 2009 1/28/10 1 32 

6. Bureau Timekeeping Practices 6/30/09 1 39 

7. Agency Checkout Process 1/12/09 1 44 

8. Accuracy of Enforcement Databases 3/31/06 1 78 
April 1, 2012 – September 30, 2012 Page 10 

 The oldest recommendation (78 months) involves “Pay.gov,” a payment system available 

to all federal agencies that enables agency customers to make secure electronic payments to the 

agency directly from their bank accounts or by credit/debit cards. The FMC still processes the 

majority of its transactions with customers, including regulated entities, by bank check. On 

October 25, 2012, management informed the OIG that the “Pay.gov” contract has been awarded. 

Requirements definition meetings between the Office of Information Technology, the 

development contractor, and FMC bureaus and offices are in progress. The contractor has begun 

development of the FMC to “Pay.gov” interface and is gathering additional information to 

finalize FMC needs and processes. Pay.gov is scheduled to become operational in January 2013. 

This will benefit, for example, license applicants who will be able to charge their application fee. 

The OIG will continue to monitor the status of this recommendation to assess delays in 

implementing this labor saving green alternative to current processing procedures. 

The second oldest recommendation involves revising existing employee check-out forms 

to itemize all agency IT systems individuals must be removed from prior to departing the agency. 

This would help to ensure access to sensitive agency data is safeguarded. The current form 

requires (i) an “Information Technology” signoff and focuses on physical IT assets, to include 

computer, monitor and phone card, and (ii) an Information Security Officer sign-off for a 

security clearance. Neither requires the employee to identify special applications s/he can access 

(payroll, procurement, licensing). These minor applications, often containing sensitive data, 

would not necessarily be removed when terminating the network account. Management 

informed the OIG that it has “drafted” a Standard Operating Procedure pertaining to HelpDesk 

procedures to address this recommendation. OIT is also gathering information from bureaus and 

offices to provide a comprehensive list of the “universe of systems and benefits to which 

employees have access” outside of FMC systems. 
April 1, 2012 – September 30, 2012 Page 11 

Contacting the Office of Inspector General

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. The OIG 

telephone number is (202) 523-5863. To report suspected wrongdoing, employees or the public 

may call the OIG Hotline on (202) 523-5865. A confidential or anonymous message can be left 

24 hours a day. Complaints or allegations of fraud, waste or abuse can also be emailed to 

oig@fmc.gov or to https://www2.fmc.gov/oigcomplaints/ (if the complainant wishes to remain 

anonymous). 

 
April 1, 2012 – September 30, 2012 Page 12 

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS 

IG Act Reference Reporting Requirement Pages 

Section 4(a)(2) Review of legislation and regulations 6 

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

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

corrective actions have not been made 9 

Section 5(a)(4) Matter referred to prosecutive authorities 5 

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

refused None 

Section 5(a)(6) List of audit reports by subject matter 3 

Section 5(a)(7) Summary of each particularly significant report 3 

Section 5(a)(8) Statistical tables showing number of reports and 

dollar value of questioned costs 13 

Section 5(a)(9) Statistical tables showing number of reports and 

dollar value of recommendations that funds be 

put to better use 

14 

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

reporting period for which no management 

decision was made by the end of the reporting 

period 

None 

Section 5(a)(11) Significant revised management decisions None 

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

the inspector general disagrees None 
April 1, 2012 – September 30, 2012 Page 13 

TABLE I

INSPECTOR GENERAL ISSUED REPORTS WITH QUESTIONED COSTS

 Dollar Value

Number

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 

0 

(i) dollar value of disallowed costs 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 

 
April 1, 2012 – September 30, 2012 Page 14 

TABLE II

INSPECTOR GENERAL ISSUED REPORTS WITH RECOMMENDATIONS 

THAT FUNDS BE PUT TO BETTER USE

Number 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 

0 

(i) dollar value of recommendations that were 

agreed to by management 

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 
HOTLINE COMPLAINTS

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

depends on the cooperation of FMC employees and the public. 

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

(202) 523-5865 

E-MAIL ADDRESS: 

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO: 

Federal Maritime Commission 

Office of Inspector General 

Room 1054 

800 North Capitol Street, NW 

Washington, DC 20573 

To Be Opened By the IG Only

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL AND YOU CAN BE ANONYMOUS

HOWEVER, CALLERS ARE ENCOURAGED TO ASSIST THE INSPECTOR GENERAL BY

SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR ADDITIONAL INFORMATION