FEDERAL MARITIME 

COMMISSION

An independent agency of the U.S. Government 

Performance and 

Accountability Report 

FISCAL YEAR 2017

Acting Chairman Michael A. Khouri

November 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| i

MESSAGE FROM THE ACTING CHAIRMAN

/s/

Michael A. Khouri

Acting Chairman

November 1, 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| ii

TABLE OF CONTENTS

MESSAGE FROM THE ACTING CHAIRMAN i

Table of Contents ii

Introduction....................................................................................................................................................ii

MANAGEMENT’S DISCUSSION and ANALYSIS 1

History, Mission, and Organization ............................................................................................................2

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

Financial Performance Overview..............................................................................................................12

Financial Statement Highlights..................................................................................................................14

Analysis of Entity’s Systems, Controls, and Legal Compliance............................................................16

Acting Chairman’s Statement of Assurance.............................................................................................19

PROGRAM PERFORMANCE INFORMATION 20

Annual Performance Report......................................................................................................................21

FINANCIAL INFORMATION 24

Message from the Chief Financial Officer / Managing Director.........................................................25

Principal Financial Statements...................................................................................................................26

Independent Auditors' Report...................................................................................................................30

........................................................................................................................................................................31

OTHER INFORMATION 14

Office of Inspector General Fiscal Year 2017 Management Challenge ..............................................15

Comments on Inspector General-Identified Management and Performance Challenge .................18

Financial Statement Audit Summary.........................................................................................................19

Management Assurances Summary...........................................................................................................19

Improper Payments Information Act.......................................................................................................20

Reduce the Footprint ..................................................................................................................................23

Civil Monetary Penalty Adjustment for Inflation ...................................................................................24

Grants Oversight & New Efficiency (GONE) Act Requirements......................................................24

Biennial Review of User Fees ....................................................................................................................24

This Report can be downloaded at http://www.fmc.gov/about/performance_and_accountability_reports.aspx. 
FMC FISCAL YEAR 2017| Performance and Accountability Report| ii

INTRODUCTION

This Performance and Accountability Report (Report or PAR) serves as a progress report wherein 

the FMC demonstrates accountability by presenting performance, management, and financial 

information for fiscal year 2017 (FY 2017). This report enables the President, Congress, and the 

public to assess the Commission’s activities and accomplishments relative to its mission and the 

resources entrusted to it. This Report satisfies the following legislation:

• The Federal Manager’s Financial Integrity Act 

of 1982 requires continuous evaluations and 

reporting of the adequacy of systems of 

internal accounting and administrative 

controls. 

• The Chief Financial Officers Act of 1990

provides for the production and submission of 

complete, reliable, timely, and consistent 

financial information for use by the Executive 

Branch of the government and the Congress in 

the financing, management and evaluation of 

Federal programs. 

• The Government Management Reform Act of 

1994 requires the submission of audited 

financial statements. 

• The Reports Consolidation Act of 2000

authorizes agencies to consolidate several 

reports to provide performance, financial, and 

other related data in a more useful manner. 

• The Inspector General Reform Act of 2008

amends the Inspector General Act of 1978 to

enhance the independence of Inspectors 

General, to create a Council of the Inspectors 

General on Integrity and Efficiency, and for 

other purposes. 

• The Government Performance and Results 

Modernization Act of 2010 (GPRA Modernization Act) requires an annual report that 

measures the performance results of the 

agency against the established agency goals. 

• The Improper Payments Elimination and 

Recovery Act of 2010 provides for estimates 

and reports of improper payments by Federal 

agencies. 

• The Digital Accountability and Transparency 

Act of 2014 (DATA Act) amends the Federal 

Funding Accountability and Transparency Act 

of 2006 (Public Law 109-282), requiring the 

establishment of government-wide data 

standards for spending information.

HOW THIS REPORT IS ORGANIZED

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

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

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

initiatives, and issues. 

Program Performance Information describes the Commission’s strategic goals and targets, and provides

data on progress toward meeting those goals during the fiscal year. 

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

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

Other Information includes a statement prepared by the Inspector General (IG) summarizing what the 

Office of the Inspector General considers to be the most serious management and performance 

challenges facing the Commission, a report on improper payments, and a table summarizing the 

financial statement audit.
MANAGEMENT’S DISCUSSION

AND ANALYSIS

Fiscal Year 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 2

HISTORY, MISSION, AND ORGANIZATION

HISTORY

The FMC was officially established on August 12, 1961, but its genesis can be traced back to the 

turmoil of World War I. Since its founding, the Federal Maritime Commission (FMC or 

Commission) has worked to ensure that neither the activities of liner shipping groups nor foreign 

government laws or regulations impose unfair costs on American shippers, exporters, or on 

American consumers of imported goods.

THE FMC TODAY

Over the past five decades, international ocean transportation has changed dramatically. The FMC, 

an independent expert agency charged with regulating liner shipping in U.S. trades, has adapted to 

and evolved with those changes. From its inception, the FMC has worked to further competition 

and integrity for America’s ocean supply chain. While the specifics of U.S. maritime policy and 

legislation have changed markedly during the last several decades, the FMC’s goals of maintaining a 

competitive and reliable international ocean transportation supply system and protecting the public 

from unlawful, unfair, and deceptive ocean transportation practices remain the cornerstone of 

today’s regulatory efforts.

STATUTORY AUTHORITY

Congress has charged the FMC with oversight responsibilities designed to ensure competitive and 

efficient ocean transportation services for the shipping public, and to protect the public from 

unlawful, unfair, and deceptive practices. The principal statutes administered by the Commission, 

now codified at 46 U.S.C. §§ 40101-44106, are:

• The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (Shipping 

Act);

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

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

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

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. 

Our mission is achieved by ensuring that the fundamental dynamics of a free, open, and competitive 

ocean transportation market drive economic outcomes. To that end, the Commission is committed 

to administering the Shipping Act while employing a minimum of government intervention and 

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

ORGANIZATION 

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

Senate, each serving a staggered five-year term. No more than three members of the Commission

may be from the same political party. One Commissioner, designated by the President, serves as 

Chairman. On January 23, 2017, Michael A. Khouri, a commissioner since 2010, was designated
FMC FISCAL YEAR 2017| Performance and Accountability Report| 3

Acting Chairman. The Chairman serves as the Chief Executive and Administrative Officer of the 

Commission. 

The FMC’s staff is comprised of economists, attorneys, and experts in ocean transportation and 

government administration. While most of the Commission’s workforce is located at its 

Washington, D.C. headquarters, the Commission maintains a presence in six major port locations 

nationwide. 

In addition to the Commissioners’ offices, the Commission is organized into 10 bureaus and offices:

The Bureau of Certification and Licensing 

(BCL) protects the public from financial 

harm through its ocean transportation 

intermediary (OTI) licensing, registration, and 

renewal program. 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. 

The 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 

Area Representatives in 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.

The Bureau of Trade Analysis (BTA)

analyzes and monitors the concerted activities 

of vessel-operating common carriers 

(VOCCs) and marine terminal operators 

(MTOs) to detect and guard against possible 

anticompetitive abuse of authority contained 

in filed agreements under the Shipping Act 

that could result in substantial increases in 

transportation costs or decreases in 

transportation services; and to identify and 

address other prohibited activities. BTA also 

reviews and analyzes service contracts, 

monitors rates of foreign, government-owned 

controlled carriers; and reviews carrierpublished tariff systems under the accessibility 

and accuracy standards of the Shipping Act. 

The Office of the Administrative Law 

Judges (OALJ) resolves cases of alleged 

violations of the Shipping Act and other laws 

within the Commission’s jurisdiction. 

Through trial-type hearings and the issuance 

of an initial decision, the OALJ ensures that 

the rights of all parties are preserved.

The Office of Consumer Affairs and 

Dispute Resolution Services (CADRS)

assists shippers, OTIs, cruise operators and 

passengers, truckers, MTOs, and VOCCs by 

providing alternative dispute resolution 

(ADR) services, ombuds assistance, mediation, 

facilitation, and arbitration to resolve disputes 

involving cargo shipments, household goods 

shipments, and cruises.

The 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.

The Office of the Inspector General 

(OIG) is an independent and objective 

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 

FMC programs; detect and prevent waste, 

fraud and abuse; promote economy, 

efficiency, and effectiveness; review existing 

and proposed legislation and regulations; keep 

the Chairman, Commissioners, and Congress 

fully informed of serious problems and 

deficiencies and recommend corrective 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 4

actions; and report violations of law to the 

U.S. Attorney General.

The Office of the General Counsel (OGC)

provides sound and timely legal services to the 

Commission and staff as it fulfills 

responsibilities that include: preparing final 

decisions, orders and regulations for 

Commission approval and issuance; 

representing the Commission in litigation 

before the courts; providing technical and 

policy assistance to other government 

agencies engaged in international negotiations 

or discussions on shipping matters; and 

providing legal opinions to the Commission, 

its staff, and the general public in appropriate 

instances. OGC also oversees the 

Commission’s international affairs activities.

The Office of the Managing Director 

(OMD) is responsible for implementing the 

administrative directives of the Chairman, the 

management and coordination of 

Commission bureaus, and overseeing the 

agency’s Area Representatives located in six 

major port areas nationwide. It has direct 

oversight of the administrative offices of the 

Commission, which include the offices of 

Budget and Finance, Human Resources, 

Information Technology, and Management 

Services. 

The 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 actions are issued by the Commission. 

The OS prepares and maintains agenda 

matters and actions taken by the Commission; 

maintains official files and records of formal

proceedings; ensures compliance with 

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.

 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 5

COMMISSIONER

DYE

COMMISSIONER

DOYLE

COMMISSIONER

MAFFEI

ACTING

CHAIRMAN

KHOURI

Office of the 

Inspector 

General

Office of 

Equal 

Employment 

Opportunity

Office 

of the 

Managing 

Director

COMMISSIONER

(Vacant)

Office of the 

General 

Counsel

Office of the 

Secretary

Office of 

Administrative 

Law Judges

Office of 

Consumer 

Affairs & 

Dispute

Resolution 

Services

Office of 

Budget and 

Finance

Office of 

Human 

Resources

Office of 

Management 

Services

Office of 

Information 

Technology

Bureau of 

Certification 

and Licensing

Bureau of 

Enforcement

Bureau of 

Trade Analysis

Area Representatives

Houston

Los Angeles

New Orleans 

New York/New Jersey

Seattle/Tacoma 

South Florida

Federal Maritime Commission

Organization Chart

September 2017

Administrative Direction
FMC FISCAL YEAR 2017| Performance and Accountability Report| 6

REGULATORY RESPONSIBILITY AND OVERSIGHT

The FMC ensures competitive and reliable ocean transportation services for the shipping public by:

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

between marine terminal operators (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 and non-vessel-operating common 

carrier (NVOCC) Service Arrangements 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 electronically available;

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

just and reasonable; and

• Taking action to address unfavorable conditions caused by foreign government or foreign business 

practices in U.S. foreign shipping trades.

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 ocean transportation intermediaries; 

• Administering a surety bond program to ensure payment of judgments for damages by NVOCCs 

and freight forwarders;

• Investigating and prosecuting violations of the Shipping Act and other statutes referenced above;

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

• Adjudicating private party complaints alleging Shipping Act violations; and

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

passengers in the event a cruise is cancelled or to cover liability in the event of death or injury at sea.

AGENCY MISSION CHALLENGES

The Commission is aware of the day-to-day issues and challenges facing the United States’ vital ocean 

transportation system and its stakeholders, and will continue to focus its efforts on fostering the Nation’s 

international trade and economic growth. This agency strives to accomplish its strategic goals by 

improving staff efficiency and closely managing its resources to enforce the Commission’s governing 

statutes and regulations to protect the shipping public. As financial resources allow, the FMC will 

continue to prioritize investments needed in information technology to improve information security,

efficiency, and greater public access, while reducing costs over time. 

REGULATORY REVIEW

The FMC reviews its processes and regulatory requirements for efficiency and effectiveness. As economic 

conditions alter the state of our trades, regulations are revised to respond to new conditions. Toward the 

goal of eliminating or reforming regulations, the Commission designated its Managing Director as the 

Commission’s Regulatory Reform Officer. The Regulatory Reform Officer and the FMC’s Regulatory 

Reform Task Force are now leading the Commission’s regulatory reform initiative to identify those 

regulations that have become less relevant in today’s fast-moving commerce, or are unduly burdensome. 

The Task Force will establish a timeline to move those items to a vote before the Commission. The 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 7

Commission recently posted a new webpage designed to provide transparent, real-time information to the 

public regarding the Commission’s regulatory reform efforts.

The Commission’s new regulatory reform initiative will continue and build on the work of the 

Commission’s current Plan for Retrospective Review of Existing Rules. The Commission issued a final rule,

aimed to relieve regulatory burdens, in Docket 16-05, Service Contracts and NVOCC Service Arrangements,

effective May 5, 2017. The rulemaking amended FMC regulations to allow amendments to service 

contracts and NVOCC service arrangements to go into effect before being filed with the Commission, 

which grants the industry enhanced ability to respond to real-time market conditions.

A Notice of Inquiry was issued in Docket No. 17-04, Regulatory Reform Initiative in May 2017. The Inquiry 

solicited information and comments by July 2017 in an effort to identify existing FMC regulations which 

are outdated, unnecessary, ineffective, eliminate jobs or inhibit job creation, impose costs that exceed 

benefits, or otherwise interfere with regulatory reform initiatives ad policies. Over 40 comments were 

received from the public. These were reviewed, analyzed, and summarized for the Commissioners. 

In FY 2017, staff prepared recommendations for Commission consideration of potential regulatory 

reforms to the filing and processing of agreements, quarterly monitoring reports and agreement meeting 

minutes, taking into consideration industry comments received in response to its Notice of Proposed 

Rulemaking (NPR) in Docket No. 16-04, Ocean Common Carrier and Marine Terminal Operator Agreements 

Subject to the Shipping Act of 1984. The Commission anticipates that the agreements rulemaking initiative will 

conclude in FY 2018.

In Docket P2-15, the National Customs Brokers & Forwarders Association of America (NCBFAA) 

petitioned the FMC to initiate a rulemaking to eliminate the NVOCC Service Arrangements (NSA)

provisions in 46 CFR Part 531 in their entirety, or alternatively, eliminate the filing and essential terms 

publication requirements for NSAs. Consolidated with that request, NCBFAA also asked the Commission 

to expand the NRA exemption in 46 CFR Part 532 to include economic terms beyond rates, and to delete 

46 CFR Part 532.5(e) that precludes any amendment or modification of an NVOCC Negotiated Rate 

Arrangement (NRA). The Commission granted the NCBFAA’s petition to “initiate a rulemaking with 

respect to the revisions discussed in the petition.” However, the Commission delayed initiating the 

requested rulemaking until after the rulemaking in Docket No. 16-05, Service Contracts and NVOCC Service 

Arrangements, was concluded. The Commission anticipates that a rulemaking proceeding will commence in

early FY 2018.

ALLIANCE AND VESSEL SHARING AGREEMENTS

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

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

availability. The difficult economic environment continues to drive changes among vessel operating 

carriers with respect to the complexity and scope of agreements filed with the Commission. 

Carrier consolidations are ongoing, and will continue to impact existing and future filed agreements. In 

particular, the merger of COSCO and China Shipping Container Lines, and the purchase of APL by CMA 

CGM, necessitated amendments to existing agreements, and resulted in plans for the formation of a new 

alliance, the OCEAN Alliance, consisting of COSCO, CMA CGM, Evergreen, and OOCL. The OCEAN 

Alliance agreement was implemented in early 2017. Leading up to the proposed implementation, there 

were substantial changes among existing alliances, as COSCO and Evergreen exited the CKYHE Alliance, 

and OOCL and APL left the G6 Alliance. Also, the CKYHE Alliance unexpectedly lost one of its five 

members when Hanjin Shipping, the seventh largest liner operator in the world at the time, filed for 

bankruptcy in September 2016. Another agreement, THE Alliance, effective in December 2016, is 

comprised of five container shipping companies: Hapag-Lloyd; K Line; MOL; NYK; and Yang Ming. A 

joint venture between Japanese carriers K Line, MOL, and NYK, announced in November 2016, will
FMC FISCAL YEAR 2017| Performance and Accountability Report| 8

create the sixth largest carrier by size and capacity. These carriers will jointly operate as the Ocean 

Network Express (ONE), beginning in April 2018.

As the industry continues to undergo significant structural change, the FMC will continue to play an 

important role in analyzing agreements for anti-competitive practices, overseeing the changes and 

monitoring the impact on the Nation’s exporters/importers to ensure goods reach international markets 

efficiently and reliably.

PORT CONGESTION AND SECURITY INITIATIVES

The FMC’s Supply Chain Innovation Teams (SCIT) Initiative continued to make progress developing 

commercial solutions to ocean supply chain challenges. Led by Commissioner Rebecca Dye, the 

Initiative’s goal is to bring together small teams of industry leaders from across the international ocean 

transportation supply chain to collaborate on solutions to improve American supply chain reliability and 

resilience, and remove obstacles to efficient U.S. supply chain operations. External teams represent key 

supply chain industries: ocean carriers, U.S. ports, marine terminal operators, warehouse operators, chassis 

providers, longshore labor, trucking, railroads, intermediaries, and American exporters and importers. 

On December 6, 2016, the Commission published an executive summary of its interim status report, 

reporting on the first phase, focusing on the import supply chain. 

In May 2017, Commissioner Rebecca Dye testified before the Senate Subcommittee on Surface 

Transportation and Merchant Marine Infrastructure, Safety and Security concerning the FMC’s SCIT 

Initiative, including the Team’s focus on "actionable" process innovations that would improve overall 

international supply chain reliability and resilience on the import side. 

On July 11, 2017, the FMC launched the second phase of the SCIT Initiative, focusing on the export 

supply chain. This phase, expected to conclude in early FY 2018, is focused on identifying the critical 

information needed by supply chain actors for improved supply chain system visibility, reliability and 

resilience for U.S. exporters and related service providers. A bedrock concept of the SCIT is the 

Commission’s commitment to help the industry address its challenges, while rejecting the notion that

additional government regulation is needed to enhance performance of the commercial supply chain. 

The FMC is active in security initiatives as they relate to U.S. ocean commerce, and works to coordinate 

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

identification of entities providing and utilizing maritime transportation services. To facilitate these 

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

Protection to provide a more efficient utilization of existing systems and services. The FMC also has an 

active MOU with the Census Bureau, U.S. Department of Commerce, to provide the FMC with access to 

the Census’ Automated Export System (AES) database. These relationships 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 Department of Homeland 

Security-led partnership of 23 Federal and international agencies targeting intellectual property- and traderelated crimes. This partnership has resulted in coordinated enforcement efforts to address international

criminal activity.

ENFORCEMENT, DISPUTE RESOLUTION, AND PUBLIC INFORMATION

With the increasing pressure of industry consolidation and port congestion, the Commission is particularly 

sensitive to the impact on the Nation’s exporters and their need for efficient ocean transportation in 

reaching foreign markets. The FMC will continue to monitor agreements, service contracts, and tariffs in 

key trades as barometers of market cycles and shifts in the balance of supply and demand. The FMC will 

continue to expand and promote its compliance-focused program to monitor and audit ocean common 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 9

carrier, NVOCC, and ocean freight forwarder operations. The Commission’s Bureau of Enforcement, 

through the Commission’s statutory and regulatory mandate, protects the shipping public and ensures 

industry adherence to U.S. shipping laws. 

The FMC provides direct services to the public through its offices, programs, and website. The 

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

The Commission works closely with the Federal Motor Carrier Safety Administration (FMCSA) and 

participated in quarterly working group and Moving Fraud Task Force meetings. The Commission’s Area 

Representatives, strategically located at six key maritime ports, commonly operate as the “front line” for 

questions and issues facing the industry. The Commission’s Office of the Secretary updates the FMC’s 

website and social media frequently, providing time sensitive 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, and to address any issues that may arise. 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.

ENCOURAGING ECONOMIC GROWTH

The Commission supports key government-wide initiatives by working to increase efficiencies and 

customer service initiatives, and by providing public access to information to make a positive difference in 

the lives of the American people and the economy. The FMC’s mission supports the President’s 

commitment to economic growth and job creation.

PROGRAM PERFORMANCE OVERVIEW

The FMC, like other Federal agencies, provides a performance plan to Congress, pursuant to the 

Government Performance and Results Act (GPRA). The Commission’s performance goals are organized 

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

on the FMC’s website. The complete Program Performance Report for FY 2017 is contained in the

Program Performance section of this Report.

ACHIEVING STRATEGIC GOAL RESULTS

The FMC developed performance goals and measures to both promote its strategic goals and support its

mission. Specific targets and strategies must be accomplished to meet the identified performance goals. 

Fiscal Year 2017 was the ninth year that the FMC undertook to quantify and measure performance goals. 

The Commission’s actual performance in FY 2017 is compared with the targeted levels of performance 

established in the agency’s Strategic Plan Fiscal Years 2014-2018 (Revised). Taken together, performance 

measures and targets under each strategic goal were designed to enhance and further those goals each 

fiscal year, bringing the agency closer to full achievement of its strategic goals. 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 10

Historical Performance of Strategic Goals and Objectives

Strategic Goal Objective Performance Measures 2014 2015 2016 2017

Goal 1. Maintain an 

efficient and competitive 

international ocean 

transportation system.

1. Enhance efficiency in 

the trades through the 

use of asset sharing 

authority under the 

Shipping Act of 1984.

Percentage share of U.S. containerized 

cargo moving on other agreement 

parties' vessels in major U.S. trades.

TARGET

39.5% 40% 40.5% 41%

ACTUAL

45.6% 49% 51% 51%

Goal 2. Protect the 

public from unlawful, 

unfair and deceptive 

ocean transportation 

practices and resolve 

shipping disputes.

1. Identify and take 

action to end unlawful, 

unfair and deceptive 

practices.

Percentage of enforcement actions taken 

under the 1984 Act successfully resolved 

through favorable judgment, settlement, 

issuance of default judgment, or 

compliance letter or notice.

TARGET

76.5% 77% 77.5% 77.5%

ACTUAL

83.8% 83.4% 88.6% 82.8%

2. Prevent public harm 

through licensing and 

financial responsibility 

requirements.

Percentage of decisions on completed 

OTI license applications rendered within 

60 calendar days of receipt, facilitating 

lawful operation of OTIs with the 

appropriate character and experience 

requirements.

TARGET

75% 75% 75% 75%

ACTUAL

71.3% 72% 79.7% 95%

3. Enhance public 

awareness of agency 

resources, remedies and 

regulatory requirements 

through education and 

outreach.

Percentage of key Commission 

issuances, orders, and reports that are 

available through the Commission’s 

website within 5 working days of receipt.

TARGET

76% 78% 80% 82%

ACTUAL

93% 92% 90% 95%

4. Impartially resolve 

international shipping 

disputes through ADR 

and adjudication.

Number of cases opened and closed 

each fiscal year using ombuds and ADR 

services to assist consumers in 

recovering goods or funds.*

TARGET

825 825 825 n/a*

ACTUAL

994 882 778 n/a*

Percentage of ombuds matters and 

ADR services provided by CADRS 

closed within six months of request 

for assistance.

ACTUAL

n/a n/a n/a 60%*

TARGET

n/a n/a n/a 90%*

Percentage of formal complaints or 

Commission-initiated orders of 

investigation completed within 2 years 

of filing or Commission initiation.

TARGET

58% 58% 60% 62%

ACTUAL

88% 90% 86% 79%

*This performance measure was replaced in 2017 with: “Percentage of ombuds matters and ADR services provided by CADRS 

closed within six months of request for assistance.” The new performance measure for 2017 and 2018 more accurately reflects 

the FMC’s performance in this area.

Building upon the success of our prior Strategic Plan, the Commission has submitted its Initial Draft 

Strategic Plan for FY 2018-2022 (draft Strategic Plan) to OMB for approval, and has invited public 

comment until December 6, 2017. The draft Strategic Plan retains, with slight language modifications, 

Strategic Goal One, “Maintain a competitive and reliable international ocean transportation supply 

system,” and Strategic Goal Two, “Protect the shipping public from unlawful, unfair and deceptive ocean 

transportation practices.” Notably, the Commission has developed a new objective under Strategic Goal 

One, namely “to ensure that actions under filed agreements do not result in unreasonable increases in 

transportation costs and/or unreasonable decreases in transportation services.” The measures to assess 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 11

this objective will track modifications made in the review process to mitigate anti-competitive effects, and 

ensure timely review of monitoring reports. 

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

Strategic Management of Human Capital – In 2017, the FMC continued to implement the strategic goals, 

strategies, and measures of results outlined in the 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 to appropriately manage succession in the Commission’s small workforce. Currently, the 2017-2022

Human Capital Plan is being constructed to reflect the results and changes of strategies and goals. 

As instructed by OMB Memorandum M-17-22, Comprehensive Plan for Reforming the Federal Government and 

Reducing the Federal Civilian Workforce, a Draft Agency Reform and Long-Term Workforce Plan FY 2018–

2022 was submitted to OMB in September 2017. 

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

marketing of the FMC; streamlining of the application process with an automated application system; 

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

incorporating organizational needs based on the annual OPM Federal Employee Viewpoint Survey 

results. To meet mission objectives, the FMC is actively working to define and plan for the workforce of 

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

Strong leadership is a critical asset, and at the close of FY 2017, 43 percent of the FMC’s executives were 

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

future needs. Current staff is being trained and developed to prepare individuals to assume greater levels 

of responsibility, and to allow the agency to continue to maintain talented and knowledgeable leadership to 

meet the challenges of the future. Continuous training and development in leadership competencies will 

prepare the next generation of leaders at the Commission.

Competitive Sourcing – The FMC submitted its FY 2017 Federal Activities Inventory Reform Act (FAIR 

Act) Inventory to OMB in June 2017. The Inventory identified 70 of the agency’s 127 authorized FullTime Equivalent employees (FTEs) as commercial activity FTEs. No challenges to its commercial 

inventories have ever been received.

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

statements in FY 2017, and will strive to make improvements in its operations and achieve unmodified

audit opinions in the future.

Expanded E-Government – The Commission continued to monitor public usage trends and leverage user 

feedback during FY 2017. Public feedback was used to refine and improve users’ experience with the 

website (www.fmc.gov), and enhance the organization, quality, clarity, and accessibility of content 

provided to the shipping public. Notable achievements in FY 2017 included: 

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

• beginning work on a major platform migration and extensive improvements to the information 

architecture of www.fmc.gov; and

• making the FMC’s public meetings under the Government in the Sunshine Act available for viewing 

in a live webcast.

The Commission remains committed to a multiyear enhancement of its IT systems, which will make it 

faster and easier for individuals and businesses doing business with the FMC to find information and 

complete required filings. Efforts to advance the Commission’s Information Resources Management 

Strategic Plan and IT Capital Plan were made during the fiscal year, and significant upgrades were made to 

the agency’s IT infrastructure. Critical applications and the Commission’s disaster recovery server were 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 12

moved to the cloud to ensure regular and effective data backups, to assist in effectively continuing 

operations during emergency events, and save the Commission the operating costs of maintaining a 

physical disaster recovery location. The FMC is compliant with FEDRAMP, and also compliant with 

Department of Homeland Security (DHS) continuous monitoring requirements for network security, and 

deploys internal security tools to effectively monitor network operations, including integrity of files, 

password sufficiency, probing for open ports and other externally visible points of attack. 

Performance Improvement – The Commission’s Strategic Plan represents the fundamental framework for 

planning and budgeting activities. Funding and FTE 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.

Fiscal Year 2017 concludes the five-year performance cycle with the Commission’s current Strategic Plan. 

An Initial Draft Strategic Plan for FY 2018-2022 was submitted to OMB for approval in September 2017. 

The public is invited to comment on this plan which may be viewed on the Commission’s website at 

https://www.fmc.gov/assets/1/Page/FY2018-2022InitialDraftStrategicPlan.pdf.

FINANCIAL PERFORMANCE OVERVIEW

The FMC’s financial condition as of September 30, 2017, is sound, and internal controls are in place to 

ensure that funds are utilized 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 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 report are prepared to report the financial position and 

results of the operations of the Federal Maritime 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 Generally Accepted Accounting Principles (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 realization that they are for a component of the U.S. 

Government. 

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 2017 appropriations for the FMC in the amount of $27,490,000 through P.L. 115-

31, an increase of $1,830,000 over the FY 2016 final appropriation level. Additionally, the Commission had 

reimbursable budget authority of $15,903 for work performed by FMC staff at other government entities. 

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

budget authority by utilizing these funds. Collections are deposited directly into the Treasury General 

Fund. This information is captured in the Statement of Custodial Activity which can be found in the

Financial Information section of this report.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 13

APPROPRIATION HISTORY

FULL-TIME EQUIVALENT HISTORY

The FMC’s FTE level is largely driven by its annual appropriation level; however, vacancies in such offices 

as the Offices of the Commissioners have sometimes remained unfilled for lengthy periods of time. The

FMC currently has only four of its five Commissioners.

The FMC experienced a 

number of retirements 

and separations in 2014, 

resulting in a lower than 

anticipated FTE level. 

The FMC had a slight 

increase in FTEs in 

2015 and 2016. The 

actual FTE level for 

2017 was 125, with 123

employees on board at 

fiscal year’s end. The 

Commission continues 

to endeavor to develop 

the appropriate mix of 

staffing and other 

available means to 

ensure effective 

accomplishment of its mission.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 14

USES OF FUNDS BY EXPENSE CATEGORY

During FY 2017, obligations against the FMC’s appropriation totaled $27,225,653, representing 99.04

percent of the funding level. The Commission spent $27.226 million as follows: 69.18 percent for salaries 

and benefits, 0.70 percent for official travel expenses, and 30.12 percent for administrative expenses (e.g., 

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

$264,347 will be allocated to legitimate increases to existing FY 2017 obligations.

18,835

190

8,201

18,370

156

7,052

$0

$5,000

$10,000

$15,000

$20,000

FY 2017 FY 2016

Salaries & Expenses Travel Administrative

Utilization of Funds by Expense Categories

($000s)

AUDIT RESULTS

The FMC again received an unmodified (“clean”) opinion on its FY 2017 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). While the statements were prepared 

from the books and records of the Commission in accordance with the formats prescribed by OMB, the 

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

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

they are for a component of the U.S. Government, a sovereign entity. One implication of this is that 

liabilities cannot be liquidated absent legislation that provides resources to do so. 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 15

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 $6,016,642 as of 

September 30, 2017. This represents an increase

from FY 2016 of $1,833,663. The FMC’s assets 

reported in the balance sheet are summarized in 

the accompanying table. 

The Fund Balance with Treasury of $5,614,138

represents the FMC’s largest asset and 

comprises 93.31 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, 2016, was $2,856 for outstanding receivables billed to both 

Federal and non-Federal entities. This accounts for 0.05 percent of the FMC’s assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 6.6 percent of the FMC’s 

total assets as of September 30, 2017. The net value of $399,648 accounts for the depreciation of all assets 

and represents the current book value of those assets.

SUMMARY OF LIABILITIES

The FMC’s liabilities totaled $2,411,049 as of 

September 30, 2017, a decrease of $966,467 from 

FY 2016. The majority of the decrease is related 

to a reduction in accounts payable.

The FMC’s accounts payable as of September 30, 

2017, was $153,972. This represents the funds 

owed for goods and services received from 

vendors. Accrued liabilities 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 (the amount of spending authority 

that remains unused at the end of the fiscal year)

and Cumulative Results of Operations (the 

cumulative excess of financing resources over 

expenses). The total net position for FY 2017 is 

an increase of $2,800,131 from FY 2016.

Unexpended Appropriations represent the 

amount of unobligated and unexpended budget authority for the 5-year period ending on September 30, 

FY 2017 FY 2016

Fund Balance With Treasury $5,614,138 $3,716,353

Accounts Receivable $2,856 $3,720

Capital Assets $399,648 $462,906

Other $0 $0

Total Assets $6,016,642 $4,182,979

Summary of Assets as of

September 30, 2017

FY 2017 FY 2016

Accounts Payable $153,972 $1,346,485

Payroll Taxes $168,533 $148,036

Federal Employee Benefits $3,307 $1,300

Custodial Liabilities $0 $0

Accrued Liabilities $2,085,237 $1,881,695

Total Liabilities $2,411,049 $3,377,516

Summary of Liabilities as of

September 30, 2017

FY 2017 FY 2016

Unexpended Appropriations $4,483,892 $1,520,851

Cumulative Results of Operations ($878,299) ($715,389)

Total Net Position $3,605,593 $805,462

Changes in Net Position Summary as of

September 30, 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 16

2017. Unobligated balances are the amount of appropriations or other authority remaining after deducting 

the cumulative obligations from the amount available for obligation for the same period. The Cumulative 

Results of Operations is the net result of FMC’s operations for all active fiscal years. 

ANALYSIS OF NET COST SUMMARY

The analysis of Net Cost Summary presents the net 

cost of FMC’s Programs as identified in the 

Annual Report. The four agency programs are 

Operational and Administrative, Formal 

Proceedings, Inspector General, and Equal 

Employment Opportunity. The Statement of Net 

Costs shows the net cost of operations for the 

agency as a whole and its sub-organizations and/or 

programs. Net Costs compared to Budgetary 

Resources can be found in the Financial Information

section of this report. This table reflects costs attributable to all active fiscal years (2013-2017).

ANALYSIS OF THE STATEMENT OF BUDGETARY RESOURCES

The Statement of Budgetary Resources (SBR) 

shows the source of the agency’s budgetary 

resources, the status of those resources at the end 

of the reporting period, and the relationship 

between the two. Total budgetary resources must 

be equal to the status of budgetary resources at all 

times. A more detailed SBR can be found in the

Financial Information section of this report. During 

FY 2017, the FMC had a total of $27,747,113 

available, representing an increase of $1,652,415 from 2016 in budgetary resources. The budgetary 

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

ANALYSIS OF ENTITY’S SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

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

operations and achieving its strategic goals. The Acting Chairman’s Statement of Assurance in the 

following section notes that the FMC does not have any material weaknesses or instances of

nonconformance to report for FY 2017. 

Additionally, in line with the new requirements of revised OMB Circular A-123, the Commission has 

formed an Enterprise Risk Management Committee to engage all agency management in the process of 

collaborating to identify, measure, and assess risk points across the agency. The Committee is developing 

a risk profile, which when used in conjunction with existing internal controls, will serve to improve the 

Commission’s accountability and effectiveness.

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT

The Federal Managers’ Financial Integrity Act (FMFIA) 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.

FY 2017 FY 2016

Obligations Incurred $27,331,928 $25,698,859

Unobligated Balance Unavailable $150,838 $310,114

Unobligated Balance Available $264,347 $85,725

Total Status of Budgetary Resources $27,747,113 $26,094,698

Statement of Budgetary Resources as of

September 30, 2017

FY 2017 FY 2016

Operational and Adminstrative $16,890,163 $19,653,861

Formal Proceedings $8,003,303 $8,080,880

Office of the Inspector General $284,734 $389,899

Office of Equal Employment Opportunity $141,325 $162,482

Total Net Cost $25,319,525 $28,287,122

Net Cost Summary as of

September 30, 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 17

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

management. The FMFIA requires that the Acting Chairman provide an assurance statement of the 

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

standards, that FMC managers are held accountable for efficient and effective performance of their duties 

in compliance with applicable laws and regulations, and for maintenance of the integrity of their activities 

through the use of controls. 

Acting Chairman Khouri has provided his annual assurance statement in this report based on various 

sources, including knowledge of the daily operation of Commission programs and reviews, frequent

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

Management Services, audits of the financial statements, and the Commission’s strategic plan. 

Additionally, the Acting Chairman meets regularly with the members of the Commission’s Senior 

Executive Service, and receives regular reports from the FMC’s Inspector General. 

Identified deficiencies in management control would be addressed at the highest management levels within 

the FMC. For instance, corrective actions for significant deficiencies identified in the information 

technology area would be overseen directly by the agency’s Chief Information Officer (CIO).

During the fiscal year, the IG identified no significant deficiencies and there were no significant 

management decisions made on which the IG disagreed. During FY 2017, management and the OIG 

reached agreement on 3 OIG audit recommendations. Management remedied all open audit

recommendations, including those from prior years. Management will work to implement any new IG

recommendations during the coming fiscal years. 

DEBT COLLECTION IMPROVEMENT ACT OF 1996

The Debt Collection Improvement Act 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. 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 CrossServicing 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 of the FMC is to minimize the amount of delinquent debt owed to the government. 

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014

The Digital Accountability and Transparency Act of 2014 (DATA Act) is an amendment to the Federal 

Funding Accountability and Transparency Act of 2006 (Public Law No. 109-282), and required the 

establishment of government-wide data standards for spending information that agencies report to 

Treasury, OMB, and the General Services Administration. Agencies began reporting standardized 

spending information as required, on May 9, 2017. 

Additionally, the DATA Act requires Treasury and OMB to publish standardized spending information 

for free access and download on the government’s USASpending.gov website by May 9, 2018.

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

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

Commission worked with ARC to ensure that it was on target with the DATA Act’s requirements. 

The Commission established a working group, prepared a DATA Act Implementation Plan, and actively 

monitored ARC’s implementation progress prior to the implementation date. The agency’s Inspector 

General completed a DATA Act Readiness Review in August 2016, and provided helpful insights which 

the Commission incorporated into its Plan.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 18

In accordance with OMB Memorandum M-15-12, agencies were required to submit their DATA Act

certifications for the second quarter of FY 2017 by April 27, 2017. Working with our financial services 

provider, the FMC complied with this requirement and submitted its DATA Act certification to OMB on 

time. Four records were found to be unreported to USASpending and two of these records were found 

not to have had Procurement Instrument Identifier (PIID) data transmitted to the accounting system. 

FMC personnel will work with BFS to address the anomalies.

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 2017, the FMC maintained a percentage of on-time payments exceeding 

99 percent.

In FY 2017, the FMC paid $10.00 in interest payments as a result of three late payments. The FMC will 

continue to work towards maintaining 100 percent on-time vendor payments in future years.

PERFORMANCE MEASURE SUMMARY

The FMC 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 Bureau of the Fiscal Service. The Commission verifies 

and reconciles all financial statements and reports prior to submission.

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. The Inspector General issued the following two reports in FY 2017:

• Independent Auditors’ Report of FMC’s FY 2016 Financial Statements; and 

• Evaluation of FMC’s Compliance with the Federal Information Security Management Act FY 2016.

There were no recommendations made in the audit of the FMC’s financial statements for FY 2016, and no 

management letter was issued. Three recommendations were made in the FY 2016 FISMA evaluation, 

and all were remediated during FY 2017. Action was taken to close all audit recommendations during the 

year. No significant deficiencies or material weaknesses were identified during FY 2017.

TREASURY ASSURANCE STATEMENT – USA SPENDING RECONCILIATION

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

using control totals with financial statement data, and comparing samples of financial data to actual award 

documents. The prime Federal award financial data reported on USAspending.gov is correct at the 

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

spending.
ACTING CHAIRMAN’S STATEMENT OF ASSURANCE

The Federal Maritime Commission is responsible for managing risks 

and maintaining effective internal control to meet the objectives of 

Sections 2 and 4 of the Federal Managers’ Financial Integrity Act of 

1982 (FMFIA). The FMC conducted its assessment of risk and

internal control in accordance with the Office of Management and 

Budget (OMB) Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control (revised July 15, 2016). Based on 

the results of this assessment, the FMC can provide reasonable 

assurance that internal controls over operations, reporting, and 

compliance were operating effectively as of September 30, 2017.

These objectives ensure effectiveness and efficiency of operations, 

reliability of reporting for internal and external use, and compliance 

with applicable laws and regulations. Additionally, the FMC conducted its assessment of the effectiveness 

of internal control over financial reporting, which includes safeguarding of assets and compliance with 

applicable laws and regulations, in accordance with the requirements of OMB Circular A-123. Based on 

the results of this evaluation, the FMC can provide reasonable assurance that its internal control over 

financial reporting as of September 30, 2017, was operating effectively and no material weaknesses were 

found in the design or operation of internal control over financial reporting.

/s/

Michael A. Khouri

Acting Chairman

November 15, 2017
PROGRAM PERFORMANCE

INFORMATION

Fiscal Year 2017
FMC FISCAL YEAR 2017 Performance and Accountability Report  21

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. This report describes progress towards 

performance targets in 2017 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. In this final year under the Commission’s 

2014-2018 Strategic Plan, the FMC’s strategic goals and objectives for FY 2017 are as follows:

• Maintain an Efficient and Competitive International Ocean Transportation System.

o Enhance efficiency in the trades through the use of asset sharing authority under the 

Shipping Act.

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

and Resolve Shipping Disputes.

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

o Prevent public harm through licensing and financial responsibility requirements.

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

through education and outreach. 

o Impartially resolve international shipping disputes through alternative dispute resolution 

and adjudication. 

The FMC quantitatively measured seven performance goals during the fiscal year. All measures 

exceeded FY 2017 targets. Each measure, target, and actual result is reported in the summary table 

below (Table 1) and includes a description of the data used to measure performance along with an 

explanation of the procedures in place to validate and ensure integrity of the reported result. 

Trend data for measures in place is shown in Table 2 on page 23 of this report. This data reflects 

continuous increases in agency efficiency and productivity – a result of both improved and 

streamlined processes, and enhanced focus on improving the critical processes and activities being 

measured. 

The FMC’s current Strategic Plan was further revised in 2013 and 2017 to replace a number of 

performance measures with new measures and targets to better reflect the work of the Commission.
FMC FISCAL YEAR 2017 Performance and Accountability Report  22

Table 1: Summary of Performance Measure Results – FY 2017

Targeted performance compared to actual results.

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

Performance Measure FY 2017

Target

FY 2017

Actual

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

2017 Target: 41%

Validation: Several different commercial sources are used that collectively provide the number of loaded containers 

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

carried by each vessel for the ship operator's own account and the number of TEUs carried by the vessel on behalf of 

other vessel operating common carriers (i.e., on behalf of third-parties). Vessels' data are aggregated, and total number 

of TEUs carried on behalf of third-parties is divided by total number of TEUs carried in the trades selected. Measure is 

applied to the transpacific and transatlantic liner trades, which together account for approximately 80% of all U.S. 

container cargo. 

41% 51%

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

Performance Measure FY 2017

Target

FY 2017

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.

2017 Target: 77.5%

Validation: 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% 82.8%

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.

2017 Target: 75%

Validation: Data fields are compared 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% 95%

Measure: Percentage of cruise line operators examined during the year that have the full financial coverage required by 

regulation to protect against loss from non-performance or casualty.

2017 Target: 95%

Validation: Measured by comparing reported financial coverage amounts against required coverage amounts. 

Approximately 200 cruise vessels are registered in and monitored by the Commission’s Passenger Vessel (Cruise) 

Operator program. Operators covered by this program file semi-annual, monthly, and weekly unearned passenger 

revenue reports. This information is used to compare reported coverage against required coverage amounts.

95% 100%

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

website within 5 working days of receipt.

2017 Target: 82%

Validation: 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 daily by agency 

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

82% 95%

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

Resolution Services (CADRS) closed within six months of request for assistance.

2017 Target: 60%

Validation: 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 

the CADRS mediator determines that particular issues prevent the possibility for successful negotiation.

60% 99%

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

filing or Commission initiation.

2017 Target: 62%

Validation: Measured using docket activity logs maintained by the Commission. The docket logs are used daily by agency 

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

62% 79%
FMC FISCAL YEAR 2017 Performance and Accountability Report  23

Table 2: Performance Measure Trends, FY 2013-2017

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

Performance Measure FY 2013 FY 2014 FY 2015 FY2016 FY 2017

Measure: Percentage share of total U.S. international oceanborne trade moved by containership as an indicator of liner shipping 

efficiency.1

TARGET 19.5% N/A N/A N/A N/A

ACTUAL 19.5% N/A N/A N/A N/A

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

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

TARGET N/A 39.5% 40% 40.5% 41%

ACTUAL N/A 45.6% 49% 51% 51%

MET/UNMET N/A MET MET MET MET

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

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.

TARGET 76% 76.5% 77% 77.5% 77.5%

ACTUAL 78.9% 83.8% 83.4% 88.6% 82.8%

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 87.6% 71.3% 72% 79.7%2 95%

MET/UNMET MET UNMET UNMET MET MET

Measure: Percentage of cruise line operators examined during the year that have the full financial coverage required by regulation to 

protect against loss from non-performance or casualty.

TARGET 93% 94% 95% 95% 95%

ACTUAL 100% 96.7% 96% 96% 100%

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 76% 76% 78% 80% 82%

ACTUAL 86% 93% 92% 90% 95%

MET/UNMET MET MET MET MET MET

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

funds.3

TARGET 800 825 825 825 N/A

ACTUAL 800 994 882 778 N/A

MET/UNMET MET MET MET UNMET N/A

Measure: Percentage of ombuds matters and ADR services provided by CADRS closed within six months of request for assistance.

TARGET N/A N/A N/A N/A 60%

ACTUAL N/A N/A N/A N/A 99%

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

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

Commission initiation.

TARGET 56% 58% 58% 60% 62%

ACTUAL 91% 88% 90% 86% 79%

MET/UNMET MET MET MET MET MET

1 This measure was replaced in FY 2014 to more accurately reflect the work of the Commission in this area. 

2 The final target result for 2016 was previously noted as 98%, the actual reflection of this measure is 79.7% for 2016.

3 This measure was replaced in FY 2017 to more accurately to reflect the FMC’s performance in this area.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 24

FINANCIAL INFORMATION

Fiscal Year 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 25

MESSAGE FROM THE CHIEF FINANCIAL OFFICER / 

MANAGING DIRECTOR

I am pleased to present the Financial section of this Performance and 

Accountability Report for Fiscal Year 2017, which demonstrates that the 

Federal Maritime Commission has continued its record of strong fiscal 

stewardship on behalf of the American people. The following financial 

statements and related notes, prepared in conformity with accounting 

principles generally accepted in the United States, and requirements set forth 

in Office of Management and Budget (OMB) Circular No, A-136, Financial 

Reporting Requirements, revised August 15, 2017, fairly present the 

Commission’s financial position. 

The FMC has again received an unmodified (“clean”) opinion on its FY 2017 financial statements. 

This 14th consecutive unmodified opinion from our independent auditor emphasizes the continuing 

commitment of this agency to maintain high standards for financial management of the resources 

entrusted to it. The FMC’s financial condition is sound, sufficient internal controls are in place to 

ensure that its budget authority is not exceeded, and 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 2017:

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

noncomformance with the Federal Managers’ Financial Integrity Act and other applicable laws 

and regulations;

• Collecting, in civil enforcement proceedings and user fees, more than $2,115,000 on behalf of 

the American public;

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

information in concise, reliable, and understandable formats; and

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

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

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

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

A-136.

This report highlights the Commission’s commitment to fulfill its fiduciary responsibilities. We are

committed to exemplary financial management and constantly strive to enhance operational 

efficiency. I wish to recognize the conscientious efforts made by the FMC staff and our financial 

service provider for their dedication and the role they play in effectively overseeing the FMC’s

limited resources, and continuing to protect the interest of the American shipping public. I am 

confident that the FMC will continue its high level of quality financial management in the coming 

fiscal years. 

/s/

Karen V. Gregory

Chief Financial Officer/Managing Director

November 15, 2017
FMC FISCAL YEAR 2017 Performance and Accountability Report  26

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 realization that they are for a component of the 

U.S. Government, a sovereign entity. Therefore, liabilities not covered by budgetary resources 

cannot be liquidated without the enactment of an appropriation, and the payment of all liabilities 

other than for contracts can be abrogated by the sovereign entity. Other limitations are included in 

the footnotes to the principal statements. The accompanying notes are an integral part of these 

statements.

The Federal Maritime Commission’s financial statements were audited by Dembo Jones, P.C., under 

contract to the FMC’s Office of the Inspector General.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 27

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF THE 

FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 and 2016
FMC FISCAL YEAR 2017| Performance and Accountability Report| 28

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 7, 2017

 

Office of Inspector General

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

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) 2017 and 2016 financial statements. The audit results

indicate that the FMC has established an internal control structure that facilitates the preparation of 

reliable financial and performance information. The Office of Inspector General (OIG) commends the 

FMC for the noteworthy accomplishment of attaining an unmodified opinion.

The OIG contracted with the independent certified public accounting firm of Dembo Jones, 

P.C. to: perform the audit of the FMC’s financial statements for the fiscal years ending September 30, 

2017 and 2016; consider internal control over financial reporting; and test the agency’s compliance 

with certain provisions of applicable laws, regulations, and contracts that could have a direct and

material effect on the financial statements. The contract required that the audit be performed in

accordance with U.S. Generally Accepted Government Auditing Standards and Office of Management 

and Budget (OMB) audit guidance.

In its audit of the FMC, 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 15, 2017 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 2017| Performance and Accountability Report| 29

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 2017| Performance and Accountability Report| 30

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

Report of Independent Auditors

To Acting Chairman Khouri

Federal Maritime Commission 

Report on the Financial Statements 

We have audited the accompanying financial statements of the Federal Maritime Commission 

(FMC), which comprise the balance sheet as of September 30, 2017 and 2016, and the related 

statements of net cost, changes in net position, budgetary resources, and custodial activity for the 

years then ended. 

Management’s Responsibility for the Financial Statements

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

in accordance with U.S. generally accepted accounting principles; this includes the design, 

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

presentation of the financial statements that are free from material misstatement, whether due to 

fraud or error.

Auditor’s Responsibility 

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

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

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

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

Budget (OMB) Bulletin No. 17-03, Audit Requirements for Federal Financial Statements. Those 

standards and OMB Bulletin No. 17-03 require that we plan and perform the audit to obtain 

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

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, 

including the assessment of the risks of material misstatement of the financial statements, whether 

due to fraud or error. In making those risk assessments, the auditor considers internal control 

relevant to the agency’s preparation and fair presentation of the financial statements in order to 

design audit procedures that are appropriate in the circumstances, but not for the purpose of 

expressing an opinion on the effectiveness of the agency’s internal control. Accordingly, we do 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 31

not express such an opinion. An audit also includes evaluating the appropriateness of accounting 

policies used and the reasonableness of significant estimates made by management, as well as 

evaluating the overall presentation of the financial statements. We believe that the audit evidence 

we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion on Financial Statements

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

the financial position of the Federal Maritime Commission as of September 30, 2017 and 2016 

and its net costs; changes in net position; budgetary resources; and custodial activity for the years 

then ended in accordance with U.S. generally accepted accounting principles.

Consideration of Internal Control

In planning and performing our audit, we considered the Federal Maritime Commission’s internal 

control over financial reporting as a basis for designing our auditing procedures and to comply 

with the Office of Management and Budget (OMB) audit guidance for the purpose of expressing 

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

control and compliance or on management’s assertion on internal control included in MD&A. 

Accordingly, we do not express an opinion on internal control over financial reporting and 

compliance or on management's assertion on the effectiveness of the entity’s internal control over 

financial reporting or on management’s assertion on internal control included in the MD&A.

Our consideration of internal control over financial reporting was for the limited purpose described 

in the preceding paragraph and was not designed to identify all deficiencies in internal control that 

might be material weaknesses or significant deficiencies and therefore, material weaknesses or 

significant deficiencies may exist that were not identified. We did not identify any deficiencies in 

internal control over financial reporting that we consider to be material weaknesses or significant 

deficiencies, as defined below.

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

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

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

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

material misstatement of the entity’s financial statements will not be prevented, or detected and 

corrected, on a timely basis.

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

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

with governance. 

Dembo Jones, P.C.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 32

Compliance With Laws and Regulations 

As part of obtaining reasonable assurance about whether the Federal Maritime Commission 

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

with certain provisions of laws and regulations for fiscal year 2017. However, providing an 

opinion on compliance with those provisions was not an objective of our audit, and accordingly, 

we do not express such an opinion. The results of our tests of compliance disclosed no instances 

of noncompliance or other matters that are required to be reported under Government Auditing 

Standards.

Consistency of Other Information

The information in the Management's Discussion and Analysis is not a required part of the 

financial statements, but is supplementary information required by U.S. generally accepted 

accounting principles. We have applied certain limited procedures, which consisted principally of 

inquiries of management regarding the methods of measurement and presentation of this 

information. However, we did not audit this information and, accordingly, we express no opinion 

on it.

The information in the Acting Chairman’s Message, Performance Section, and Other 

Accompanying Information is presented for purposes of additional analysis and is not required as 

part of the financial statements. This information has not been subjected to auditing procedures 

and, accordingly, we express no opinion on it.

Rockville, Maryland

November 15, 2017

Dembo Jones, P.C.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 33

APPENDIX A

FEDERAL MARITIME COMMISSION 

COMMENTS ON AUDIT REPORT
FMC FISCAL YEAR 2017| Performance and Accountability Report| 34

Federal Maritime Commission

Washington, DC 20573

 Office of the 

Managing Director

November 15, 2017

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 2017. 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, 2017, 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 2017| Performance and Accountability Report| 35

APPENDIX B

FEDERAL MARITIME COMMISSION 

FINANCIAL STATEMENTS

FOR THE YEARS ENDED 

SEPTEMBER 30, 2016 and 2017

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 36

2017 2016

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 5,614,138 $ 3,716,353

Accounts Receivable (Note 3) - 1,955

Total Intragovernmental 5,614,138 3,718,308

Accounts Receivable, Net (Note 3) 2,856 1,765

Property, Equipment, and Software, Net (Note 4) 399,648 462,906

Total Assets $ 6,016,642 $ 4,182,979

Liabilities:

Intragovernmental

Accounts Payable $ 2,100 $ 434,801

Other (Note 6) 168,533 148,036

Total Intragovernmental 170,633 582,837

Accounts Payable 151,872 911,684

Federal Employee and Veterans' Benefits (Note 5) 3,307 1,301

Other (Note 6) 2,085,237 1,881,695

Total Liabilities $ 2,411,049 $ 3,377,517

Net Position:

Unexpended Appropriations - Other Funds $ 4,483,892 $ 1,520,851

Cumulative Results of Operations - Other Funds (878,299) (715,389)

Total Net Position $ 3,605,593 $ 805,462

Total Liabilities and Net Position $ 6,016,642 $ 4,182,979

BALANCE SHEET

AS OF SEPTEMBER 30, 2017 AND 2016

(In Dollars)

FEDERAL MARITIME COMMISSION
FMC FISCAL YEAR 2017| Performance and Accountability Report| 37

2017 2016

Program Costs:

Operational and Administrative

Gross Costs $ 16,890,163 $ 19,698,881

Less: Earned Revenue - (45,020)

Net Program Costs $ 16,890,163 $ 19,653,861

Formal Proceedings

Gross Costs $ 8,017,250 $ 8,118,034

Less: Earned Revenue (13,947) (37,154)

Net Program Costs $ 8,003,303 $ 8,080,880

Office of Inspector General

Gross Costs $ 284,734 $ 389,899

Net Program Costs $ 284,734 $ 389,899

Office of Equal Employment Opportunity

Gross Costs $ 141,325 $ 162,482

Net Program Costs $ 141,325 $ 162,482

Net Cost of Operations (Note 9) $ 25,319,525 $ 28,287,122

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(In Dollars)
FMC FISCAL YEAR 2017| Performance and Accountability Report| 38

2017 2016

Cumulative Results of Operations:

Beginning Balances $ (715,389) $ (785,463)

Budgetary Financing Sources:

Appropriations Used 24,229,686 27,226,099

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 10) 926,929 1,131,097

Total Financing Sources 25,156,615 28,357,196

Net Cost of Operations (25,319,525) (28,287,122)

Net Change (162,910) 70,074

Cumulative Results of Operations $ (878,299) $ (715,389)

Unexpended Appropriations:

Beginning Balances $ 1,520,851 $ 3,167,730

Budgetary Financing Sources:

Appropriations Received 27,490,000 25,660,000

Other Adjustments (297,273) (80,780)

Appropriations Used (24,229,686) (27,226,099)

Total Budgetary Financing Sources 2,963,041 (1,646,879)

Total Unexpended Appropriations $ 4,483,892 $ 1,520,851

Net Position $ 3,605,593 $ 805,462

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(In Dollars)
FMC FISCAL YEAR 2017| Performance and Accountability Report| 39

2017 2016

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 395,839 $ 302,459

Recoveries of Prior Year Unpaid Obligations 125,033 100,146

Other changes in unobligated balance (277,706) (50,080)

Unobligated balance from prior year budget authority, net 243,166 352,525

Appropriations 27,490,000 25,660,000

Spending authority from offsetting collections 13,947 82,173

Total Budgetary Resources $ 27,747,113 $ 26,094,698

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 12) $ 27,331,928 $ 25,698,859

Unobligated balance, end of year:

 Apportioned, unexpired account (Note 2) 264,347 85,725

Expired unobligated balance, end of year (Note 2) 150,838 310,114

Unobligated balance, end of year (total) 415,185 395,839

Total Budgetary Resources $ 27,747,113 $ 26,094,698

Change in Obligated Balance

 Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 3,322,469 $ 4,109,740

New obligations and upward adjustments (Note 12) 27,331,928 25,698,859

Outlays (gross) (25,330,411) (26,385,984)

Recoveries of Prior Year Unpaid Obligations (125,033) (100,146)

Unpaid Obligations, End of Year (Gross) 5,198,953 3,322,469

Uncollected payments:

Uncollected Customer Payments, Federal Sources, Brought Forward, October 1 (1,955) (14,540)

Change in Uncollected Payments, Federal Sources 1,955 12,585

Uncollected Customer Payments, Federal Sources, End of Year - (1,955)

Memorandum entries:

Obligated Balance, Start of Year $ 3,320,514 $ 4,109,740

Obligated Balance, End of Year $ 5,198,953 $ 3,320,514

Budget Authority and Outlays, Net:

Budget authority, gross $ 27,503,947 $ 25,742,173

Actual offsetting collections (35,470) (125,458)

Change in Uncollected Payments, Federal Sources 1,955 12,585

Recoveries of prior year paid obligations 19,568 30,700

Budget Authority, net, (total) $ 27,490,000 $ 25,660,000

Outlays, gross $ 25,330,411 $ 26,385,984

Actual offsetting collections (35,470) (125,458)

Outlays, net, (total) 25,294,941 26,260,526

Distributed Offsetting Receipts (234,968) (225,359)

Agency outlays, net $ 25,059,973 $ 26,035,167

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(In Dollars)
FMC FISCAL YEAR 2017| Performance and Accountability Report| 40

2017 2016

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 2,115,237 $ 3,703,552

Total Cash Collections (Note 14) 2,115,237 3,703,552

Accrual Adjustments 2,161 (2,163)

Total Custodial Revenue 2,117,398 3,701,389

Disposition of Collections:

Transferred to Others (by Recipient) 2,115,237 3,703,552

Increase/(Decrease) in Amounts Yet to be Transferred 2,161 (2,163)

Total Disposition of Collections 2,117,398 3,701,389

Net Custodial Activity $ - $ -

(In Dollars)

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016
FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

41

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-vesseloperating common carriers and ocean freight 

forwarders) operating in the U.S. foreign 

commerce to ensure they maintain just and 

reasonable practices; maintains trade monitoring, 

enforcement and dispute resolution programs 

designed to assist regulated entities in achieving 

compliance and to detect and remedy 

malpractices and violations of the 1984 Act; 

monitors the laws and practices of foreign 

governments which could have a discriminatory 

or otherwise adverse impact on shipping 

conditions in U.S. trades, and imposes remedial 

action, as appropriate, pursuant to section 19 of 

the 1920 Act or FSPA; enforces special regulatory 

requirements applicable to carriers owned or 

controlled by foreign governments; processes and 

reviews agreements, service contracts, and 

service arrangements pursuant to the 1984 Act for 

compliance with statutory requirements; and 

reviews common carriers’ privately published 

tariff systems for accessibility and accuracy, as 

required by OSRA. 

The 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.

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.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 42

42

B. Basis of Presentation

The financial statements have been prepared to 

report the financial position and results of 

operations of FMC. The Balance Sheet presents 

the financial position of the Commission. The 

Statement of Net Cost presents the Commission’s 

operating results; the Statement of Changes in Net 

Position displays the changes in the 

Commission’s equity accounts. The Statement of 

Budgetary Resources presents the sources, status, 

and uses of the Commission’s resources and 

follows the rules for the Budget of the United 

States Government.

The statements are a requirement of the Chief 

Financial Officers Act of 1990 and the 

Government Management Reform Act of 1994. 

They have been prepared from, and are fully 

supported by, the books and records of FMC in 

accordance with the hierarchy of accounting 

principles generally accepted in the United States 

of America, standards issued by the Federal 

Accounting Standards Advisory Board (FASAB), 

Office of Management and Budget (OMB) 

Circular A-136, Financial Reporting Requirements, as amended, and FMC accounting policies 

which are summarized in this note. These 

statements, with the exception of the Statement of 

Budgetary Resources, are different from financial 

management reports, which are also prepared 

pursuant to OMB directives that are used to 

monitor and control FMC’s use of budgetary 

resources. The financial statements and associated 

notes are presented on a comparative basis. 

Unless specified otherwise, all amounts are 

presented in dollars.

C. Basis of Accounting

Transactions are recorded on both an accrual

accounting basis and a budgetary basis. Under the 

accrual method, revenues are recognized when 

earned, and expenses are recognized when a 

liability is incurred, without regard to receipt or 

payment of cash. Budgetary accounting facilitates 

compliance with legal requirements on the use of 

federal funds.

D. Fund Balance with Treasury

Fund Balance with Treasury is the aggregate 

amount of the FMC’s funds with Treasury in 

expenditure and receipt accounts. Appropriated 

funds recorded in expenditure accounts are 

available to pay current liabilities and finance 

authorized purchases. 

E. Accounts Receivable

Accounts receivable consists of amounts owed to 

FMC by other Federal agencies and the general 

public. Amounts due from Federal agencies are 

considered fully collectible. An allowance for 

uncollectible accounts receivable from the public 

is established when, based upon a review of 

outstanding accounts and the failure of all 

collection efforts, management determines that 

collection is unlikely to occur considering the 

debtor’s ability to pay.

F. Property, Equipment, and Software

Property, equipment and software represent 

furniture, fixtures, equipment, and information 

technology hardware and software which are 

recorded at original acquisition cost and are 

depreciated or amortized using the straight-line 

method over their estimated useful lives. Major 

alterations and renovations are capitalized, while 

maintenance and repair costs are expensed as 

incurred. FMC’s capitalization threshold is 

$25,000 for individual purchases. Property, 

equipment, and software acquisitions that do not 

meet the capitalization criteria are expensed upon 

receipt. Applicable standard governmental 

guidelines regulate the disposal and convertibility 

of agency property, equipment, and software. The 

useful life classifications for capitalized assets are 

as follows:

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 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 43

43

time of prepayment and recognized as expenses 

when the related goods and services are received.

H. Liabilities

Liabilities represent the amount of funds likely to 

be paid by the FMC as a result of transactions or 

events that have already occurred.

The FMC reports its liabilities under two 

categories, Intragovernmental and With the 

Public. Intragovernmental liabilities represent 

funds owed to another government agency. 

Liabilities with the Public represent funds owed 

to any entity or person that is not a federal agency, 

including private sector firms and federal 

employees. Each of these categories may include 

liabilities that are covered by budgetary resources 

and liabilities not covered by budgetary resources.

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist of accounts 

payable and accrued payroll and benefits. 

Accounts payable represent amounts owed to 

another entity for goods ordered and received and 

for services rendered except for employees. 

Accrued payroll and benefits represent payroll 

costs earned by employees during the fiscal year 

which are not paid until the next fiscal year.

Liabilities not covered by budgetary resources are 

liabilities that are not funded by any current 

appropriation or other funding source. These 

liabilities consist of accrued annual leave, 

actuarial Federal Employees’ Compensation Act 

(FECA), and the amounts due to Treasury for 

collection and accounts receivable of civil 

penalties.

I. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the 

accrual is reduced as leave is taken. The balance 

in the accrued leave account is adjusted to reflect 

current pay rates. Liabilities associated with other 

types of vested leave, including compensatory, 

restored leave, and sick leave in certain 

circumstances, are accrued at year-end, based on 

latest pay rates and unused hours of leave. 

Funding will be obtained from future financing 

sources to the extent that current or prior year 

appropriations are not available to fund annual 

and other types of vested leave earned but not 

taken. Non-vested leave is expensed when used. 

Any liability for sick leave that is accrued but not 

taken by a Civil Service Retirement System 

(CSRS)-covered employee is transferred to the 

Office of Personnel Management (OPM) upon the 

retirement of that individual. Credit is given for 

sick leave balances in the computation of 

annuities upon the retirement of Federal 

Employees Retirement System (FERS)-covered 

employees.

J. Accrued and Actuarial Workers’ 

Compensation

The FECA administered by the U.S. Department 

of Labor (DOL) addresses all claims brought by 

the FMC employees for on-the-job injuries. The 

DOL bills each agency annually as its claims are 

paid, but payment of these bills is deferred for two 

years to allow for funding through the budget 

process. Similarly, employees that the FMC 

terminates without cause may receive unemployment compensation benefits under the 

unemployment insurance program also administered by the DOL, which bills each agency 

quarterly for paid claims. Future appropriations 

will be used for the reimbursement to DOL. The 

liability consists of (1) the net present value of 

estimated future payments calculated by the DOL, 

and (2) the unreimbursed cost paid by DOL for 

compensation to recipients under the FECA.

K. Retirement Plans

FMC employees participate in either the CSRS or 

the FERS. The employees who participate in 

CSRS are beneficiaries of FMC matching 

contribution, equal to 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 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 44

44

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% 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 provides information 

regarding the full cost of health and life insurance 

benefits. FMC recognized the offsetting revenue 

as imputed financing sources to the extent these 

expenses will be paid by OPM.

FMC does not report on its financial statements 

information pertaining to the retirement plans 

covering its employees. Reporting amounts such 

as plan assets, accumulated plan benefits, and 

related unfunded liabilities, if any, is the 

responsibility of the OPM, as the administrator.

L. Other Post-Employment Benefits

FMC employees eligible to participate in the 

Federal Employees' Health Benefits Plan 

(FEHBP) and the Federal Employees' Group Life 

Insurance Program (FEGLIP) may continue to 

participate in these programs after their 

retirement. The OPM has provided the FMC with 

certain cost factors that estimate the true cost of 

providing the post-retirement benefit to current 

employees. The FMC recognizes a current cost 

for these and Other Retirement Benefits (ORB) at 

the time the employee's services are rendered. 

The ORB expense is financed by OPM, and offset 

by the FMC through the recognition of an imputed 

financing source. 

M. Use of Estimates

The preparation of the accompanying financial 

statements in accordance with generally accepted 

accounting principles requires management to 

make certain estimates and assumptions that 

affect the reported amounts of assets, liabilities, 

revenues, and expenses. Actual results could 

differ from those estimates. 

N. Imputed Costs/Financing Sources

Federal Government entities often receive goods 

and services from other Federal Government 

entities without reimbursing the providing entity 

for all the related costs. In addition, Federal 

Government entities also incur costs that are paid 

in total or in part by other entities. An imputed 

financing source is recognized by the receiving 

entity for costs that are paid by other entities. 

FMC recognized imputed costs and financing 

sources in fiscal years 2017 and 2016 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. Reclassification

Certain fiscal year 2016 balances have been 

reclassified, re-titled, or combined with other 

financial statement line items for consistency with 

the current year presentation.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 7

7

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2017, and 2016 were as follows:

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

Treasury accounts.

The available unobligated fund balances represent the current-period amount available for obligation or 

commitment. At the start of the next fiscal year, this amount will become part of the unavailable balance, 

as described in the following paragraph.

The unavailable unobligated fund balances represent the amount of appropriations for which the period of 

availability for obligation has expired. These balances are available for upward adjustments of obligations 

incurred only during the period for which the appropriation was available for obligation or for paying claims 

attributable to the appropriations. The obligated balance not yet disbursed, includes accounts payable, 

accrued expenses, and undelivered orders that have reduced unexpended appropriations but have not yet 

decreased the fund balance on hand (see also Note 13).

2017 2016

Fund Balances:

Appropriated Funds $ 5,614,138 $ 3,716,353 

Total $ 5,614,138 $ 3,716,353 

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 264,347 $ 85,725 

 Unavailable 150,838 310,114 

Obligated Balance Not Yet Disbursed 5,198,953 3,320,514 

Total $ 5,614,138 $ 3,716,353 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 8

8

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2017, and 2016, 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, 2017 and 2016.

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2017

Schedule of Property, Equipment, and Software as of September 30, 2016

2017 2016

Intragovernmental

Accounts Receivable $ - $ 1,955

Total Intragovernmental Accounts Receivable $ - $ 1,955

2017 2016

With the Public

Miscellaneous Accounts Receivable $ 2,731 $ 1,765

Interest Receivable 7 -

Penalties and Fines Receivable 118 -

Total Public Accounts Receivable $ 2,856 $ 1,765

Total Accounts Receivable $ 2,856 $ 3,720

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 614,777 445,153 169,624

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

Total $ 1,069,801 $ 670,153 $ 399,648

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 614,777 381,895 232,882

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

Total $ 1,069,801 $ 606,895 $ 462,906
FMC FISCAL YEAR 2017| Performance and Accountability Report| 9

9

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2017 and 2016 include liabilities not covered by budgetary 

resources. Congressional action is needed before budgetary resources can be provided. Although future 

appropriations to fund these liabilities are likely and anticipated, it is not certain that appropriations will be 

enacted to fund these liabilities. 

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual workers 

compensation claims and unemployment benefits paid on FMC’s behalf and payable to the DOL. FMC 

also records an actuarial liability for future workers compensation claims based on the liability to benefits 

paid (LBP) ratio provided by DOL and multiplied by the average of benefits paid over three years. 

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The balance in 

the accrued annual leave account is reviewed quarterly and adjusted as needed to accurately reflect the 

liability at current pay rates and leave balances. Accrued annual leave is paid from future funding sources 

and, accordingly, is reflected as a liability not covered by budgetary resources. Sick and other leave is 

expensed as taken.

NOTE 6. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2017 were as follows:

Other liabilities account balances as of September 30, 2016 were as follows:

2017 2016

Intragovernmental – FECA $ 813 $ 889

Intragovernmental – Unemployment Insurance 1,754 -

Unfunded Leave 1,272,767 1,177,870

Actuarial FECA 3,307 1,301

Other Liabilities 25 -

Total Liabilities Not Covered by Budgetary Resources $ 1,278,666 $ 1,180,060

Total Liabilities Covered by Budgetary Resources 1,132,383 2,197,457

Total Liabilities $ 2,411,049 $ 3,377,517

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 813 $ 813

Unemployment Insurance Liability 1,754 - 1,754

Payroll Taxes Payable 163,805 - 163,805

 Custodial Liability 2,161 - 2,161

Total Intragovernmental Other Liabilities $ 167,720 $ 813 $ 168,533

With the Public

 Payroll Taxes Payable $ 20,991 $ - $ 20,991

 Accrued Funded Payroll and Leave 791,454 - 791,454

 Unfunded Leave 1,272,767 - 1,272,767

 Other Liabilities with Related Budgetary Obligations 25 - 25

Total Public Other Liabilities $ 2,085,237 $ - $ 2,085,237
FMC FISCAL YEAR 2017| Performance and Accountability Report| 10

10

NOTE 7. OPERATING LEASES

FMC occupies office space in seven locations, of which six of the lease agreements are required to be 

accounted for as operating leases. Lease payments are increased annually based on the adjustments for 

operating cost and real estate tax escalations. The total operating lease expense for fiscal years 2017 and 

2016 were $3,036,110 and $3,193,005, respectively. The lease locations and terms are listed below:

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

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

NOTE 8. CONTINGENT LIABILITIES

FMC records commitments and contingent liabilities for legal cases in which payment has been deemed 

probable, and for which the amount of potential liability has been estimated, including certain judgments 

that have been issued against the agency. The FMC has no knowledge of any lawsuits/investigations in 

which payment is deemed probable. 

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 889 $ 889

Payroll Taxes Payable 147,147 - 147,147

Total Intragovernmental Other Liabilities $ 147,147 $ 889 $ 148,036

With the Public

 Payroll Taxes Payable $ 20,356 $ - $ 20,356

 Accrued Funded Payroll and Leave 683,470 - 683,470

 Unfunded Leave 1,177,869 - 1,177,869

Total Public Other Liabilities $ 1,881,695 $ - $ 1,881,695

Location Term Lease Expiration Date

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 03/15/2024

Fiscal Year Totals

2018 $ 3,225,021 

2019 3,231,351 

2020 3,232,209 

2021 3,227,456 

2022 3,217,107 

Thereafter 334,899 

Total Future Minimum Payments $ 16,468,043 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 11

11

NOTE 9. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other federal 

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

revenue are summarized as follows:

2017 2016

Operational and Administrative

 Intragovernmental Costs $ 3,994,022 $ 4,867,783

 Public Costs 12,896,141 14,831,098

 Total Program Costs 16,890,163 19,698,881

 Intragovernmental Earned Revenue - (45,020)

 Net Program Costs 16,890,163 19,653,861

Formal Proceedings

 Intragovernmental Costs 2,417,983 5,719,697

 Public Costs 5,599,267 2,398,337

 Total Program Costs 8,017,250 8,118,034

 Intragovernmental Earned Revenue (13,947) (37,154)

 Total Net Cost 8,003,303 8,080,880

Office of Inspector General

 Intragovernmental Costs 77,510 260,578

 Public Costs 207,224 129,321

 Net Program Costs 284,734 389,899

Office of Equal Employment Opportunity

 Intragovernmental Costs 31,246 36,018

 Public Costs 110,079 126,464

 Net Program Costs 141,325 162,482

Total Intragovernmental costs 6,520,761 10,884,076

Total Public costs 18,812,711 17,485,220

 Total Costs 25,333,472 28,369,296

 Total Intragovernmental Earned Revenue (13,947) (82,174)

Total Net Cost $ 25,319,525 $ 28,287,122
FMC FISCAL YEAR 2017| Performance and Accountability Report| 12

12

NOTE 10. IMPUTED FINANCING SOURCES 

FMC recognizes as imputed financing the costs of future benefits which include health benefits, life 

insurance, pension and post-retirement benefit expenses for current employees. The assets and liabilities 

associated with such benefits are the responsibility of the administering agency, OPM. For the years ended 

September 30, 2017 and 2016 imputed financing was as follows:

NOTE 11. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE UNITED 

STATES GOVERNMENT

The President’s Budget that will include fiscal year 2017 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2018 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb/. The 2018 Budget of the United States 

Government, with the "Actual" column completed for 2016, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

In Millions

NOTE 12. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2017 and 2016 consisted of 

the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 13. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the years ended ended September 30, 2017 and 2016, budgetary resources obligated for undelivered 

orders amounted to $4,068,707 and $1,125,012, respectively.

2017 2016

Office of Personnel Management $ 926,929 $ 1,131,097 

Total Imputed Financing Sources $ 926,929 $ 1,131,097 

Distributed

Budgetary Obligations Offsetting Net

FY2016 Resources Incurred Receipts Outlays

Statement of Budgetary Resources $ 26 $ 26 $ - $ 26

Budget of the U.S. Government $ 26 $ 26 $ - $ 26

2017 2016

Direct Obligations, Category A $ 27,316,025 $ 25,608,181

Reimbursable Obligations, Category A 15,903 90,678

Total Obligations Incurred $ 27,331,928 $ 25,698,859
FMC FISCAL YEAR 2017| Performance and Accountability Report| 13

13

NOTE 14. CUSTODIAL REVENUES

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

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

as custodial revenue on the Statement of Custodial Activity. The type of cash collected is for fines, penalties 

and administrative fees. A small portion is for interest on the past due fines. Another component of the 

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, 2017 and 2016.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows:

NOTE 15. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

FMC has reconciled its budgetary obligations and non-budgetary resources available to its net cost of 

operations.

2017 2016

Custodial Collections:

 Fines, Penalties, and Forfeitures $ 1,887,513 $ 3,482,000

 General Fund Proprietary Receipts (User fees) 234,886 225,359

 Refunds of Proprietary Receipts (User fees) (7,244) (3,807)

 Interest 82 -

Total Custodial Collections $ 2,115,237 $ 3,703,552

2017 2016

 Obligations Incurred $27,331,928 $25,698,859

 Spending Authority from Offsetting Collections and Recoveries (158,548) (213,019)

 Offsetting Receipts (234,968) (225,359)

 Obligations Net of Offsetting Collections and Recoveries 26,938,412 25,260,481

 Imputed Financing from Costs Absorbed by Others 926,929 1,131,097

 27,865,341 26,391,578

 (2,707,733) 1,835,708

 25,157,608 28,227,286

Generate Resources in the Current Period 161,917 59,836

Net Cost of Operations $25,319,525 $28,287,122

Components of the Net Cost of Operations That 

Will Not Require or Generate Resources in the 

Current Period

 Total Components of Net Cost of Operations That will not Require or 

 Total Resources Used to Finance the Net Cost of Operations 

Resources Used to Finance Activities

Budgetary Resources Obligated

Other Resources

 Total Resources Used to Finance Activities 

Resources Used to Finance Items Not Part of the 

Net Cost of Operations

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

Operations 
OTHER INFORMATION

Fiscal Year 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 15

OFFICE OF INSPECTOR GENERAL

FISCAL YEAR 2017 MANAGEMENT CHALLENGE

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 12, 2017

Office of Inspector General

TO: Acting Chairman Khouri

Commissioner Dye 

Commissioner Doyle 

Commissioner Maffei

FROM: Inspector General 

SUBJECT: Inspector General’s Statement on the Federal Maritime Commission’s Management 

and Performance Challenge

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) 2017. 

The Office of Inspector General (OIG) has identified one management and performance 

challenge this year, information technology (IT) security. Although the Commission has made 

progress on this challenge since last year, the OIG acknowledges that IT security remains a 

government-wide challenge and the FMC will need to remain vigilant to protect the information and 

information systems of the agency. 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 15, 2017. 

 /s/

Jon Hatfield

Attachment

Cc: Karen V. Gregory, Managing Director

Peter J. King, Deputy Managing Director
FMC FISCAL YEAR 2017| Performance and Accountability Report| 16

Office of Inspector General

Fiscal Year 2017 Management Challenge

1. The Management Challenge - Information Technology Security

The Office of Inspector General (OIG) recognizes the Federal Maritime Commission (FMC) 

has continued to make improvements on the agency’s information technology (IT) security. 

Notwithstanding these improvements, the OIG has identified IT security as a management challenge 

because IT security remains a government-wide challenge and the FMC will need to remain vigilant 

to protect the information and information systems of the agency. 

In a report1 dated September 28, 2017, the Government Accountability Office points out that 

as computer technology has advanced, Federal agencies have become dependent on computerized 

information and electronic data to carry out operations and to process, maintain, and report essential 

information. Further, GAO acknowledges that agencies would find it difficult, if not impossible, to 

carry out their missions and account for their resources without these information assets. As a result, 

securing these systems and data is critical. 

GAO first designated Federal information security as a government-wide high-risk area 20 

years ago in 1997. 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. GAO continues to identify Federal information 

security as a government-wide high-risk area in their February 2017 high-risk update report.

The FMC shares with other Federal government departments and agencies this challenge due 

to the evolving and growing threats to government information systems. Risks to information and 

communication systems include insider threats from disaffected or careless employees and business 

partners; escalating and emerging threats from around the globe; the ease of obtaining and using 

hacking tools; the steady advance in the sophistication of attack technology; and the emergence of 

new and more destructive attacks.

One of the most recent examples of the challenges faced by Federal agencies to protect 

information and information systems is the cybersecurity incident at the Securities and Exchange 

Commission (SEC). In August 2017, the SEC learned that an incident previously detected in 2016 

may have provided the basis for illicit gain through trading. Specifically, a software vulnerability in 

a component of the SEC’s EDGAR database was exploited and resulted in access to nonpublic 

information. Another example, first reported in early 2015 by the Office of Personnel Management 

(OPM), involved the discovery of malicious cyber activity on its network. Two separate but related 

OPM cybersecurity incidents impacted the data of Federal government employees, contractors, and 

others. OPM first discovered malicious cyber activity on its network resulting in the exposure of the 

personnel data of approximately 4.2 million current and former Federal government employees. OPM 

later discovered malicious cyber activity on its network resulting in the exposure of the background 

investigation records of approximately 21.5 million individuals, primarily current, former, and 

prospective Federal employees and contractors. The frequency and increased sophistication of cyber 

1 Government Accountability Office, GAO-17-549, Federal Information Security, Weaknesses Continue to 

Indicate Need for Effective Implementation of Policies and Practices, (September 28, 2017).
FMC FISCAL YEAR 2017| Performance and Accountability Report| 17

threats underscores the need to properly manage and bolster the security of Federal information 

systems, and to remain vigilant. 

Agency Progress in Addressing the Challenge

The Federal Information Security Management Act of 2002 (FISMA) established information 

security program and evaluation requirements for Federal agencies in the executive branch, including 

the FMC. Each year, the FMC OIG performs an independent evaluation of the information security 

program and practices of the agency. The results of the evaluation are reported annually to the Office 

of Management and Budget; selected congressional committees; the Comptroller General; and the 

FMC’s Commission and management. 

In the OIG’s Evaluation of the FMC’s Compliance with the Federal Information Security 

Management Act (FISMA) FY 2016, the OIG found the FMC had effectively implemented six of the 

nine outstanding prior year FISMA recommendations. Further, the FY 2016 FISMA evaluation 

contained three new recommendations to address three findings; however, two of the three 

recommendations were implemented by the agency prior to the release of the November 2016 report. 

The Challenge Ahead

Significant cybersecurity incidents at Federal agencies, and GAO’s continued identification 

of Federal information security as a government-wide high-risk area, are important reminders that the 

FMC must continue their focus on protecting the agency’s information and information systems. 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 18

COMMENTS ON INSPECTOR GENERAL-IDENTIFIED MANAGEMENT AND 

PERFORMANCE CHALLENGE

The Commission agrees with the Inspector General on the Management and Performance Challenge

identified, and remains committed to focusing on this high-risk challenge with careful planning, 

attention, and diligence. The role of the Inspector General is essential government-wide to ensure

government accountability to the American public, and the FMC appreciates its Inspector General’s 

efforts in reviewing the agency’s work as well as its compliance with Federal laws and mandates. A 

response to the challenge is outlined below:

1. Information Technology Security

The Commission remains ever mindful of the increasing frequency and sophistication of cyber 

threats, and appreciates working proactively with the Inspector General and his auditor to 

strengthen the Commission’s security posture, and focus on protecting its information and 

information systems. The cybersecurity incidents mentioned underscore the continuing need for 

the Federal government to be increasingly vigilant and to constantly monitor, manage, and 

bolster security controls over Federal information systems. Protecting against unauthorized 

access to the Commission’s information and information systems, and guarding against

improper use of computing resources, will remain a priority during the coming years. 
FMC FISCAL YEAR 2017| Performance and Accountability Report| 19

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 

2017 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 

Federal Managers’ 

Financial Integrity Act 

(FMFIA) of 1982. The 

last portion of this 

table summarizes the 

FMC’s compliance 

with the Federal 

Financial 

Management 

Improvement Act 

(FFMIA).

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 n/a

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 n/a

Total Material Weaknesses None n/a n/a n/a n/a n/a

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 non-compliance] None n/a n/a n/a n/a n/a

Total non-compliances None n/a n/a n/a n/a n/a

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 2017| Performance and Accountability Report| 20

IMPROPER PAYMENTS INFORMATION ACT

NARRATIVE SUMMARY OF IMPLEMENTATION EFFORTS FOR FY 2017

The FMC has fully complied with the requirements of OMB Circular A-123, Appendix C, 

Requirements for Effective Estimation and Remediation of Improper Payments, 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 identify those determined to be susceptible to significant improper 

payments. 

Following the guidance of OMB Circular Number A-136, a risk assessment analysis was completed. 

OMB Circular No. A-136 defines significant erroneous payments to be annual erroneous payments 

in a program that exceed both $10 million and 1.5 percent or $100 million of total annual 

disbursements. The assessment considered certain risk factors that would likely cause improper 

payments. It covered all disbursement programs including travel, payroll, intragovernmental 

transactions, and vendor payments. It was determined that 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 No. A-136 (Appendix C). 

The FMC’s authorized budget for FY 2017 was $27,490,000. Obligations against the FMC’s 

appropriation totaled $27,225,653, representing 99.04 percent of the funding level. The largest 

annual disbursements were related to salaries and benefits, and represent 69 percent of the annual 

budget. The next largest allocation of funds (30.12 percent) was for administrative expenses which 

include 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 2017. The following chart denotes the FMC’s qualitive risk analysis for 

FY 2017.

Classification of Payment 

Activities: 

Fiscal Year 2017

Appropriation Baseline 

Reported to Congress

Improper 

Payments 

Identified in 

PAR

Improper 

Payments 

Percent of TP

Significant Improper 

Payment Test (1) both 

1.5% and $10M of TP

Significant 

Improper 

Payment Test (2) 

$100M/Program

Payroll $18,834,383.00 $0.00 0.0000% No No

Travel $189,926.00 $176.49 0.0929% No No

Administrative Expenses:

 Government Vendors* $4,818,495.00 $0.00 0.0000% No No

 Commercial Vendors $3,382,849.00 $0.00 0.0000% No No

Total $27,225,653.00 $176.49 0.0006%

* Government vendors includes rental payments made to GSA.

Federal Maritime Commission IPERIA Risk Assessment 2017
FMC FISCAL YEAR 2017| Performance and Accountability Report| 21

We are confident that we have an efficient and effective process which provides a reasonable 

assurance that payments are made for legitimate and proper expenses of the FMC. The FMC 

maintains a very low erroneous payment percentage and continually strives to reduce those 

payments. We plan to continuously review, monitor, and evaluate our programs and activities.

The Federal Maritime Commission has not identified any program that in and of itself constitutes a 

high-risk for improper payments. Therefore, the FMC considers all 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 on any payroll-related payments. Any overpayments 

made to an FMC employee by the NFC on behalf of the FMC, would be offset by NFC. In 

FY 2017, the FMC processed five overpayments for a total of $176.49. The FMC did not identify 

any improper collections through the Intergovernmental Payments and Collections (IPAC). 

I. The FMC used a statistical sample conducted by BFS to determine its improper payment 

rate. 

II. The FMC will continue to monitor payments to affect a zero-dollar improper payment 

figure. To this end, the FMC will ensure that there is sufficient segregation of duties 

pertaining to payments concomitantly with closer scrutiny of all IPAC collections made 

against the Commission. The FMC will continue to monitor all disbursements made on its 

behalf to ensure payments are valid and proper.

III. The table below represents the improper payments made by the FMC in FY 2017 with 

percentage forecasts through FY 2020. 

FMC $27,225,653.00 Payroll $18,834,383.00 Adminsitrative* $7,927,420.00 Travel - CBA $189,926.00 Purchase Card $273,924.00 

Risk (High, Med, or Low)

Criteria

Is the program new?

Is the process to determine correct 

payment amounts complex?

Is there a high volume of payments?

Are payments or eligibility decisions 

made outside the agency (i.e., State or 

local governments or regional Federal 

field office)?

Have there been recent changes in 

program funding, authorities, practices 

or procedures?

Are the personnel responsible for making 

program eligibility determinations or 

certifying that payments are accurate 

inexperienced or lacking in training?

Are there significant deficiencies in the 

audit reports of the agency that might 

hinder accurate payment certification?

Are there any indicators from prior years' 

improper payment work that would 

indicate potential risk?

Score

Risk: Scoring:

Low 8 - 12 No 1

Medium 13 - 20 Somewhat 2

High 21 - 24 Yes 3

* Total administrative costs are $8,201,344 (administrative + purchase cards). 

No (1), Somewhat (2), Yes (3)

Activity Annual 

Expenditures

Low

1

1

3

1

2

1

1

1

11

Low

1

1

1

9

1

2

1

1

1

No (1), Somewhat (2), Yes (3)

1

1

11

1.00 1 1

10.50 11

1.00 1

1.00 1

2.00 2 2

1.00 1 1

1.00 1 1

2.50 3 3

Low Low Low

1.00 1 1

No (1), Somewhat (2), Yes (3) No (1), Somewhat (2), Yes (3) No (1), Somewhat (2), Yes (3)

Fiscal Year 2017 Systematic Method: Qualitative Risk Assessment Questionnaire

Total Annual 

Expenditures

Annual 

Expenditures

Annual 

Expenditures

Annual 

Expenditures Program Activity Activity Activity
FMC FISCAL YEAR 2017| Performance and Accountability Report| 22

Improper Payments Information Act Reduction Outlook FY 2017 – 2020

(millions)

Program FY 17

Outlays

FY 17

IP %

FY 18

IP $

FY 18

%

FY 19

%

FY 20

%

Formal Proceedings $0.00 0.00 $0.00 0.00 0.00 0.00

Inspector General $0.00 0.00 $0.00 0.00 0.00 0.00

Equal Employment Opportunity $0.00 0.00 $0.00 0.00 0.00 0.00

Operational and Administrative $0.00 0.00 $0.00 0.00 0.00 0.00

Totals $0.00 0.00 $0.00 0.00 0.00 0.00

IV. The FMC has a segregation of duties in place to ensure that all invoices processed for 

payment are legitimate expenses of the agency. All IPAC invoices are received by BFS and 

forwarded to OBF electronically for internal processing and payment authorization. When 

an invoice is received, it is first verified as a valid invoice belonging to the agency. OBF 

matches the invoice to documentation provided by the Contracting Officer’s Representative 

(COR) indicating that goods/services have been received by the Commission, and approves 

the invoice for payment. BFS is advised of the purchase order the invoice is being paid 

against and the payment amount. OBF also ensures that sufficient funds have been 

obligated to make the payment and provides BFS with the period of performance. Once the 

payment authorization has been processed by OBF, the payment information is verified by a 

second OBF staff member. At that point, the invoice is electronically returned to BFS for 

processing. When the payment is loaded into the Oracle database, a final funds availability 

check is made by the financial system against the fund controls set for the FMC. OBF 

audits the payment information posted in the financial system.

V. The Acting 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 Acting 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 

there are sufficient funds available to pay the agency’s expenses. The OBF is responsible for 

reducing and recovering improper payments, and keeps senior agency officials apprised of all 

relevant activities.

VII. a. The FMC does not have an in-house information system to help reduce improper 

payments. The agency utilizes the infrastructure and financial system maintained by BFS 

in Parkersburg, WV.

b. In 2017, the FMC requested funding to maintain the contract between the FMC and 

BFS for financial support and platform access to the Oracle database through Oracle’s 

Discoverer portal.

VIII. There are no statutory or regulatory barriers that limit the agency’s ability to take corrective 

actions to address any improper payments.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 23

REDUCE THE FOOTPRINT

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

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

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

operating costs. 

The FMC does not have any real property and leases space through General Services Administration 

(GSA). Although not a CFO Act agency, the FMC does work closely with GSA to better steward 

government resources. In looking to better align the size of its leased space with actual program 

needs, the FMC further reconfigured its headquarters space in FY 2017, and returned approximately 

1,395 square feet of space, providing an annual cost savings of approximately $66,000. The FMC 

will continue to evaluate its space needs going forward. 

Table 1: Reduce the Footprint Policy Baseline Comparison 

FY 2015

(Baseline) FY 2017 Change (FY 2015 Baseline – FY 2017)

Square Footage (SF in millions) 0.067 0.063 0.003

Table 2: Reporting of O & M Cost – Owned and Direct Lease Buildings

FY 2015 Reported Cost FY 2017 Reported Cost Change in Baseline 2012-

2017

Operation and Maintenance (O&M) 

Costs N/A* N/A* N/A*

*The FMC does not directly lease or own any space, but has occupancy agreements with GSA.
FMC FISCAL YEAR 2017| Performance and Accountability Report| 24

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 of inflation adjustments, and current penalty levels. The Federal Register notice may be 

viewed at: http://www.fmc.gov/assets/1/Documents/17-01_FedReg.pdf. 

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 August 1, 2016 January 15, 2017 $2,011,061

Knowing and Willful violation / Shipping Act of 

1984, or Commission regulation or order

46 U.S.C. 

41107(a) August 1, 2016 January 15, 2017 $57,391

Violation of Shipping Act of 1984, Commission 

regulation or order, not knowing and willful

46 U.S.C. 

41107(b) August 1, 2016 January 15, 2017 $11,478

Operating in foreign commerce after tariff 

suspension

46 U.S.C. 

41108(b) August 1, 2016 January 15, 2017 $114,782

Failure to provide required reports, etc. / 

Merchant Marine Act of 1920 46 U.S.C. 42104 August 1, 2016 January 15, 2017 $9,054

Adverse shipping conditions / Merchant Marine 

Act of 1920 46 U.S.C. 42106 August 1, 2016 January 15, 2017 $1,810,706

Operating after tariff or service contract 

suspension / Merchant Marine Act of 1920 46 U.S.C. 42108 August 1, 2016 January 15, 2017 $90,535

Failure to establish financial responsibility for nonperformance of transportation* 46 U.S.C. 44102 August 1, 2016 January 15, 2017 $22,868

$762

Failure to establish financial responsibility for 

death or injury* 46 U.S.C. 44103 August 1, 2016 January 15, 2017 $22,868$762

Program Fraud Civil Remedies Act / makes false 

claim

31 U.S.C. 

3802(a)(1) August 1, 2016 January 15, 2017 $10,957

Program Fraud Civil Remedies Act / giving false 

statement

31 U.S.C. 

3802(a)(2) August 1, 2016 January 15, 2017 $10,957

*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 $22,868, 

plus $762 for each passage sold, in current dollars.

GRANTS OVERSIGHT & NEW EFFICIENCY (GONE) ACT REQUIREMENTS

Category 2-3 Years 3-5 Years >5 Years

Number of Grants / Cooperative Agreements with Zero Dollar Balances 0 0 0

Number of Grants / Cooperative Agreements with Undisbursed Balances 0 0 0

Total Amount of Undisbursed Balances 0 0 0

NOTE: The Federal Maritime Commission does not award grants or cooperative agreement awards.

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 cover program and administrative costs 

incurred as necessary. The Commission published notice of its final rule, Update of Existing and 

Addition of New User Fees, in August 2016. New user fee rates took effect in FY 2017, on October 1, 

2016.