FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 1

FEDERAL MARITIME COMMISSION

MANAGEMENT’S DISCUSSION and ANALYSIS 

Fiscal Year 2008 
 1 

MANAGEMENT’S DISCUSSION and ANALYSIS 

A MESSAGE FROM THE COMMISSION 

The Federal Maritime Commission’s (“FMC” or “Commission”) Performance and Accountability Report for 

Fiscal Year 2008 will enable industry participants and the public to understand the Commission’s ongoing 

performance in the regulation of the international ocean shipping industry. We believe that the performance and 

financial data in the Report are complete and reliable under Office of Management and Budget guidelines. In a few 

clearly marked instances, estimates have been used where actual numbers do not yet exist. As data becomes 

available, those estimates will be replaced with actual figures in subsequent Reports. 

The Commission’s mission is to: 

• Develop and administer policies and regulations that foster a fair, efficient and secure maritime 

transportation system; 

• Protect U.S. maritime commerce from unfair foreign trade practices and market-distorting activities; 

• Facilitate compliance with U.S. shipping statutes through outreach and oversight; 

• Assist in resolving disputes. 

The fundamental mandate underlying the agency’s mission is to help remove impediments to fair competition – 

undue controls, influences or non-market barriers imposed by any nation, carrier, cargo owner or transportation 

intermediary – which can adversely affect U.S. oceanborne trade. Our regulatory system calls for necessary 

oversight with minimal disruption to the efficient flow of U.S. imports and exports, ensuring fair competition in the 

ocean transportation industry while allowing the industry to conduct business as efficiently as possible. We are 

committed to developing programs and processes that will enable the Commission to fulfill this mission in the 

context of an evolving industry. In doing so, we strive to increase performance efficiencies and the effectiveness of 

our workforce. 

In fiscal year 2008, the Commission set out to achieve twelve specific performance goals. Progress was made on 

each of the goals which the Commission pursued in 2008: one goal was fully achieved, one goal was substantially 

changed and two goals were deemed unnecessary or not feasible. During fiscal year 2008, the Commission drafted 

a new Strategic Plan for 2010-2015 and in that process changed the manner in which it will measure performance, 

setting performance goals directly linked to new strategic goals. In addition, the Commission continued its 

substantial progress towards fulfillment of the President’s Management Agenda. Notably, the agency received an 

unqualified opinion on its financial statements for the fifth consecutive year. The agency further expanded its use 

of electronic government by increasing the number of documents available online and by making substantial 

progress towards agency-wide database integration. Regarding succession planning, the Commission updated 

Commission Order 90, Emergency Preparedness Program, which outlines the Commission’s order of succession 

plan as well as its vital records program. 

The Commission is proud of its fiscal year 2008 accomplishments and we look forward to continuing to provide 

high-quality service to the American public in future years. 

Sincerely, 

 

November 17, 2008 

MANAGEMENT’S DISCUSSION & ANALYSIS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 2

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Introduction 

This Management’s Discussion and Analysis represents the completion of the Federal Maritime Commission’s 

program and financial management process for fiscal year (“FY”) 2008, which began with mission and program 

planning, continued with the formulation and justification of FMC’s budget submission to the President and 

Congress, through budget execution, and ending with a report of our program performance and the use of 

resources. This report was prepared pursuant to the requirements of the Chief Financial Officers Act, as amended 

by the Reports Consolidation Act, and the Office of Management and Budget (“OMB”) Circular No-A136 

(Revised), and covers the Commission’s activities from October 1, 2007 through September 30, 2008. 

FMC Core Functions 

The FMC is an independent transportation/trade regulatory agency which administers the Shipping Act of 1984 

(“1984 Act” or “Shipping Act”) as amended by the Ocean Shipping Reform Act of 1998 (“OSRA”); section 19 of 

the Merchant Marine Act, 1920 (“1920 Act”); the Foreign Shipping Practices Act of 1988 (“FSPA”); and Public 

Law (“P.L.”) 89-777 (passenger vessel certification). The Commission: monitors the activities of ocean common 

carriers, marine terminal operators, conferences, ports and ocean transportation intermediaries (non - vessel - 

operating common carriers and ocean freight forwarders) which operate in the U. S. foreign commerce to ensure 

they maintain just and reasonable practices; maintains a trade monitoring and enforcement program designed to 

assist regulated entities in achieving compliance and to detect and appropriately remedy malpractices and 

violations of the prohibited acts set forth in section 10 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 arrangements and service contracts 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 Commission 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 or injury to passengers. 

Organization 

The FMC is composed of five Commissioners appointed for five-year terms by the President with the advice and 

consent of the Senate. No more than three members of the FMC may belong to the same political party. The 

President designates one of the Commissioners to serve as Chairman. The Chairman is the chief executive and 

administrative officer of the agency. The FMC’s organizational units consist of: Offices of the Commissioners; 

Office of the General Counsel (“OGC”); Office of the Secretary (“OS”), including the Library and Office of 

Consumer Affairs and Dispute Resolution Services (“CADRS”); Office of Administrative Law Judges (“OALJ”); 

Office of Equal Employment Opportunity (“EEO”); Office of the Inspector General (“OIG”); Office of Operations 

(“OPS”), including the Bureaus of Certification and Licensing (“BCL”), Enforcement (“BOE”), and Trade 

Analysis (“BTA”); and Office of Administration (“OA”), including the Offices of Financial Management 

(“OFM”), Human Resources (“OHR”), Information Technology (“OIT”), and Management Services (“OMS”). 

The majority of FMC personnel are located in Washington, DC, with Area Representatives (“ARs”) in New York, 

New Orleans, Los Angeles, Seattle, Houston and South Florida. 
 3 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Office of Equal

Employment

Opportunity

Office of the

Inspector General

Office of the

Secretary

Office of

Operations

Office of

Administration

Office of the

General Counsel

Commissioner

(DYE)

Commissioner

(BRENNAN)

Chairman *

(Vacant)

Commissioner

(CREEL)

Commissioner **

(Vacant)

Bureau of

Certification

 and Licensing

Bureau of

Enforcement

Bureau of Trade

Analysis

Office of

Administrative

Law Judges

Office of

Consumer Affairs

and Dispute

Resolution

Services

Area

Representatives

New York

Los Angeles

Houston

New Orleans

Seattle

South Florida

Office of Financial

Management

Office of Human

Resources

Office of

Information

Technology

Office of

Management

Services

 MANAGEMENT’S DISCUSSION and ANALYSIS 

*The former Chairman resigned on November 30, 2006. 

**The Commissioner position was vacated on May 30, 2008. 

Organizational Chart as of September 30, 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 4

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Regulatory Responsibility 

The Commission’s principal regulatory responsibilities include: 

• Reviewing agreements among ocean common carriers and marine terminal operators (“MTOs”) relating to 

service in the U.S. foreign oceanborne trades, to ensure that they do not cause substantial increases in 

transportation costs or decreases in transportation services. 

• Reviewing service contracts between ocean common carriers and shippers to guard against detrimental effects 

to shipping in the U.S. foreign trades. 

• Ensuring that common carriers’ tariff rates and charges are accessible to the shipping public in private, 

electronically accessible systems. 

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

and reasonable. 

• Issuing passenger vessel certificates evidencing financial responsibility of vessel owners or charterers to pay 

judgments for personal injury or death, or to refund passenger fares for the nonperformance of a voyage or 

cruise. 

• Licensing OTIs in the U.S. to protect the public from unqualified, insolvent, or dishonest companies. 

• Ensuring that OTIs maintain sufficient financial responsibility to protect the shipping public from financial 

loss. 

• Protecting the shipping public against economic harm by investigating rates, charges, classifications, and 

practices of common carriers, MTOs, and OTIs operating in the foreign commerce of the U.S.

• Taking action to address unfavorable conditions arising out of foreign government or business practices in the 

U.S. foreign shipping trades. 

The FMC is authorized by the FSPA, section 19 of the 1920 Act, and section 13(b)(6) of the 1984 Act to take 

action to ensure that the foreign commerce of the U.S. is not burdened by non-market barriers to ocean shipping. 

The FMC may take countervailing action to correct unfavorable shipping conditions in U.S. foreign commerce and 

may impose penalties. The FMC may address actions by carriers or foreign governments that adversely affect 

shipping in the U.S. foreign oceanborne trades including the intermodal operations of carriers or the operations of 

OTIs, or that impair access of U.S.-flag vessels to ocean trade between foreign ports. 

The 1984 Act is applicable to the operations of common carriers and other persons engaged in U.S. foreign 

commerce. It exempts agreements that have become effective under the 1984 Act from the U.S. antitrust laws, as 

contained in the Sherman and Clayton Acts. The FMC reviews and evaluates agreements to ensure that they do 

not exploit the grant of antitrust immunity, and to ensure that agreements do not otherwise violate the 1984 Act or 

result in an unreasonable increase in transportation cost or unreasonable reduction in service. 
 5 

MANAGEMENT’S DISCUSSION and ANALYSIS 

In addition to monitoring relationships among carriers, the FMC is also responsible for ensuring that individual 

carriers, as well as those permitted by agreement to act in concert, fairly treat shippers and other members of the 

shipping public in accordance with the 1984 Act’s prohibition against undue discrimination. The 1984 Act also 

requires all carriers to make their rates, charges and practices available in automated tariff systems that must be 

available electronically to the public. Non-vessel-owning common carriers (“NVOCCs”) may assess the rates and 

charges published in their tariffs or may offer service arrangements with shipping customers. Ocean common 

carriers are permitted to enter into service contracts with their shipper customers. Such contracts are filed 

electronically with the FMC in our Internet-based system, and are provided confidential treatment by the FMC as 

required by the Act. The FMC does not have the authority to approve or disapprove general rate increases 

(“GRIs”) or individual commodity rate levels in the U.S. foreign commerce, except with regard to certain foreign 

government-owned or -controlled carriers. 

P. L. 89-777 requires the operators of passenger vessels with 50 or more berths who embark passengers at U.S. 

ports to establish financial coverage to indemnify passengers in cases of death, injury, or nonperformance of 

transportation. The FMC certifies such operators upon the submission of satisfactory evidence of financial 

responsibility. The FMC ensures that all OTIs operating in the foreign commerce of the U.S. have established 

sufficient financial responsibility to protect shippers from financial loss. Additionally, the FMC licenses all U.S. 

OTIs. 

The FMC carries out its regulatory responsibilities by conducting informal and formal investigations. It holds 

hearings, considers evidence and renders decisions, and issues appropriate orders and implementing regulations. 

The FMC also adjudicates and mediates disputes involving the regulated community, the general shipping public, 

and other affected individuals or interest groups. 

The FMC also carries out a management and support function for information technology (“IT”), financial 

management, human resources, and administrative support. 

The FMC oversees approximately 5,400 regulated persons (passenger vessel operators, conferences, OTIs, etc.). 

The FMC has a new, improved, easy-to-navigate website which contains more information concerning the 

agency’s activities and responsibilities. Please visit us at www.fmc.gov. 

Future Challenges 

International trade remains dependent upon an efficient ocean transportation system. The ocean shipping industry 

continues to face significant challenges related to port and maritime security, port congestion, industry 

consolidation and dynamic economic conditions. As the industry restructures to adapt to these changes, it is 

imperative for the FMC to ensure that its oversight produces a competitive trading environment in U.S. ocean 

commerce that is in harmony with, and responsive to, international shipping practices, and encourages fair and 

open commerce. 

In response to industry changes, the Commission continues to review its regulatory initiatives to ensure that agency 

resources are utilized in a manner best suited to accomplish statutory obligations with a minimum of government 

intervention and regulatory cost. Similarly, we have implemented new internal business processes that are more 

responsive to the needs of the industry and other government agencies. 

Cooperative working arrangements with front-line security agencies remain in place. Effective use of emerging 

information technologies continue to facilitate our efforts. 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 6

Program Performance Overview 

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

Government Performance and Results Act (“GPRA”). The FMC has organized its performance goals to achieve its 

strategic goals. The complete FY 2008 Program Performance Report is contained in Chapter 2, Program 

Performance. In FY 2008, the Commission focused on refining the agency’s business practices, specifically on 

revising and updating internal procedures in line with the amendment of Commission regulations. This includes 

facilitating the use and dissemination of filed material in order to improve analysis of required filings and 

responsiveness to inquiries, and implementation of procedural changes to enhance the effectiveness of agency 

operations. We broadened our efforts to implement the President’s Management Agenda initiative to expand 

electronic government (“e-government”) by improving the management of information through the more effective 

use of available technologies. We also streamlined the delivery of services and information to regulated entities, 

other government agencies and the public, and further automated agency systems and enhanced the use of agency 

databases to allow staff to discharge program responsibilities more effectively. In FY 2008 the Commission 

updated Commission Order 90, Emergency Preparedness Program, which outlines the Commission’s order of 

succession plan as well as its vital records program. Overall, we are pleased with the success we achieved in 

addressing our stated goals and objectives. 

Achieving Strategic Goal Results 

The FMC has a distinct process for measuring performance. Performance goals are developed to promote one of 

the FMC’s strategic goals, and the processes or activities required to achieve the goals are identified. The agency 

then specifies the outcomes it believes will result from accomplishing each stated goal, and agrees on performance 

indicators as the quantifiers of performance. Finally, performance measures are established for evaluation of 

achievement of performance goals. Taken together, performance goals under each strategic goal are designed to 

enhance and further those goals each fiscal year, bringing the agency closer to its ideal of full achievement of its 

strategic goals. 

Financial Performance Overview 

As of September 30, 2008, the financial condition of the FMC was sound with respect to having sufficient funds to 

meet program needs and adequate control of funds in place to ensure obligations did not exceed budget authority. 

The FMC’s accounting services provider, the Bureau of the Public Debt (“BPD”), prepared the agency’s financial 

statements in accordance with accounting standards and OMB Circular A-136, Financial Reporting Requirements 

(Revised 6/03/2008). 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
 7 

MANAGEMENT’S DISCUSSION and ANALYSIS 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Sources of Funds 

The FMC has a single source of funds, Salaries and Expenses, funded by an annual appropriation that is available 

for commitments and obligations incurred during the fiscal year in which the authority was granted. The FMC’s 

total new budget authority for FY 2008 was $22,072,000. This represents a net increase in budget authority over 

FY 2007 of $1,644,090. Although the FMC collects remittances for “user fees” and “fines and penalties,” the 

agency is not authorized to offset any of its budget authority by utilizing these funds. The collections are deposited 

directly into the Treasury General Fund, and captured in the Statement of Custodial Activity which can be found in 

Chapter 3, Auditors’ Reports and Financial Statements.

Personnel Strength History 

 

The FMC’s actual full time equivalent (“FTE”) level has fluctuated since 2000. After a decline in 2001, the FMC 

experienced modest growth in its FTE level through 2004, followed by an annual decline through 2008. The 

agency has endeavored to develop the appropriate mix of staffing and other available means to ensure the effective 

accomplishment of our mission. 

In recent years, the Commission has been authorized a total of 180 FTE positions. Due to appropriation levels, the 

Commission has been required to maintain full-time personnel levels much lower than authorized. 

14,097 15,466 16,477 16,591

18,471

19,340 20,294 20,427

22,072

2000 2001 2002 2003 2004 2005 2006 2007 2008 0

5,000

10,000

15,000

20,000

25,000

Appropriation

FederalMaritime Commission

Appropriation

(000s)

128 121 127 129 129 124 121 119 115

0

50

100

150

200

2000 2001 2002 2003 2004 2005 2006 2007 2008

FTE

FederalMaritime Commission FTE Strength
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 8

Uses of Funds by Expense Category 

In FY 2008, the FMC incurred new obligations of $21.6 million, which was a $4.2 million increase over FY 2007. 

Of the total appropriation, 66.5% was used for salaries and benefits. Of the remaining budget authority, 1% was 

used for Commission travel expenses and the remaining 32.5% was used for administrative expenses also known 

as operating expenses (e.g., rent, furniture, printing, maintenance). The un-obligated authority balance of $447,579 

will remain active for four years to service FMC-established requirements. 

Audit Results 

The FMC received an unqualified opinion on its FY 2008 financial statements from the independent auditing firm 

of Dembo, Jones, Healy, Pennington & Marshall, P.C. under contract through the FMC’s OIG. Comparative 

statements can be located in Chapter 3, Auditors’ Report and Financial Statements. 

Financial Statement Highlights 

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

Commission pursuant to the requirements of 31 U.S.C. 3515(b). These statements have been prepared from the 

books and records of the Commission in accordance with the formats prescribed by OMB and are in addition to the 

financial reports used to monitor and control budgetary resources. The financial statements, footnotes, and the 

remainder of the required supplementary information appear in their entirety in Chapter 3, Auditors’ Report and 

Financial Statements. A brief analysis of the principal statements follows. 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

14,380

11,425

231 186

7,013

5,813

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY 2008                                                       FY2007    

Utilization of Funds by Expense Categories

Salaries & Expenses Travel Administrative
 9 

MANAGEMENT’S DISCUSSION and ANALYSIS 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Analysis of the Balance Sheet 

The FMC’s assets in FY 2008 were $4,128,825 

as of September 30, 2008. This represents an 

increase over FY 2007 of $1,212,310. The 

FMC’s assets reported in the balance sheet are 

summarized in the accompanying table. 

The Fund Balance with Treasury is comprised 

only of annual appropriations maintained by the 

Department of the Treasury to address current 

liabilities. The FMC had an increase in its FY 

2008 Fund Balance with Treasury of 42.8% over 

the FY 2007 level. The FY 2008 Fund Balance of 

$4,062,134 includes FY 2008 budget authority not spent in the amount of $447,579, largely due to vacancies of 

senior management and Commissioner positions. Also included is unavailable funds of $300,086 representing 

spending authority from prior years; these funds represent expired authority unavailable for new obligations. The 

final and largest portion of the Fund Balance with Treasury is obligated balances not yet disbursed totaling 

$3,314,469. This category represents goods and services received by the Commission for which vendors have not 

been paid. 

Accounts Receivable represents all outstanding debts owed the Commission from its customers. As of September 

30, 2008 the total book value for accounts receivable was $64,579.

The “Net” value of $2,112 for Capital Assets, also known as Property, Plant and Equipment accounts for the 

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

The FMC’s Liabilities totaled $2,451,226 as of 

September 30, 2008. The accompanying table 

depicts an increase of $126,739 total liabilities 

over FY 2007. Accounts Payable represents goods 

and services received for which vendors have not 

been paid as of the close of FY 2008. Federal 

Employee Benefits represents accrued salaries and 

liabilities that are not funded by budgetary 

resources. These liabilities represent future 

workers’ compensation and accrued annual leave. 

Analysis of the Statement of Changes in 

Net Position 

The Statement of Changes in Net Position reports 

the change in the agency’s net position during the 

reporting period. The statement is a summary of 

two factors, Unexpended Appropriations and 

Cumulative Results in Operations. The increase of 

$1,085,571 from FY 2007 to FY 2008 is due 

principally to an increase in unexpended 

appropriations. 

Net Position is the difference between total assets 

and total liabilities. The total net position for FY 

2008 is an increase of $1,085,571 from FY 2007. 

Unexpended Appropriations represents the total authority granted by Congress that the FMC has not expended as 

of September 30, 2008. The decrease in Cumulative Results is due mainly to the net decrease in Capital Assets as 

of September 30, 2008. 

FY 2008 FY 2007 

Fund Balance with Treasury $4,062,134 $2,843,269 

Accounts Receivable $64,579 $66,144 

Capital Assets (Net) $2,112 $7,102 

Other 0 0 

Summary of Assets as of September 30, 2008 

Total Assets $4,128,825 $2,916,515 

Summary of Liabilities as of September 30, 2008 

FY 2008 FY 2007 

Accounts Payable $310,274 $315,679 

Payroll Taxes Payable $130,152 $110,916 

Accrued Liabilities $914,920 $820,051 

Total Liabilities $2,451,226 $2,324,487 

Federal Employee Benefits $1,032,287 $1,012,520 

Custodial Liability $63,593 $65,321 

Net Position Summary as of September 30, 2008 

FY 2008 FY 2007 

Unexpended Appropriations $2,706,788 $1,596,624 

Cumulative Results of 

Operations 

($1,029,189) ($1,004,596) 

Total Net Position $1,677,599 $592,028 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 10

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Analysis of Net Cost 

The analysis of Net Cost presents the net cost 

of FMC’s five Commission Programs as 

identified in the FMC’s Annual Report. The 

five agency programs are Office of 

Administration, Office of Operations, Formal 

Proceedings, Office of Inspector General, and 

Office of Equal Employment Opportunity. 

Net Costs compared to Budgetary Resources 

can be found in Chapter 3, Auditors’ Report 

and Financial Statements. 

Analysis of the Statement of Budgetary Resources 

 The Statement of Budgetary Resources 

(“SBR”) shows the source of the agency’s 

budgetary resources and the status of those 

resources at the end of the reporting period. 

The total budgetary resources must be equal 

to the status of budgetary resources at all 

times. A more detailed SBR can be found in 

Chapter 3, Auditors’ Report and Financial 

Statements. For FY 2008, the FMC had total 

budgetary resources available of $22,438,514. 

This represents a 8.1% increase over FY 2007 

budgetary resources available of $20,747,389. 

For FY 2008, the FMC incurred obligations 

of $21,690,849, representing 98.3% of available funding. The unobligated balance of $447,579 is largely due to 

vacancies of senior management and Commissioner positions. 

 Summary of the Statement of Budgetary Resources as of 

September 30, 2008 

FY 2008 FY 2007 

Total Budgetary Resources $22,438,514 $20,747,389 

Obligations Incurred $21,690,849 $20,536,495 

Status of Budgetary Resources $22,438,514 $20,747,389 

Unobligated Balance $447,579 $4,511 

Unobligated Balance Unavailable $300,086 $206,383 

 Summary of the Statement of 

Net Cost as of September 30, 2008 

FY 2008 FY 2007 

Office of Administration $6,088,432 $8,869,541 

Office of Equal Employment 

Opportunity 

$161,903 $141,593 

Net Cost of Program Services $22,015,432 $21,409,846 

Office of Inspector General $597,799 $394,294 

Formal Proceedings $5,627,251 $4,801,085 

Office of Operations $9,540,047 $7,203,333 
 11 

MANAGEMENT’S DISCUSSION and ANALYSIS 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Systems, Controls, and Legal Compliance 

This section provides information on FMC’s compliance with the: 

Federal Managers’ Financial Integrity Act 

Federal Financial Management Improvement Act 

Prompt Payment Act 

Debt Collection Improvement Act 

Biennial Review of User Fees 

Performance Measure Summary 

Inspector General Act 

Federal Managers’ Financial Integrity Act 

The Federal Managers’ Financial Integrity Act (“FMFIA”) requires that agencies establish controls that reasonably 

ensure that obligations and cost comply with applicable law; assets are safeguarded against waste, loss, 

unauthorized use, or misappropriation; and revenues and expenditures are properly recorded and accounted for. It 

requires the agency head to provide an assurance statement of the adequacy of management controls and 

conformance of financial systems with Government standards. 

In our Message earlier in this document, the Commission provided its annual assurance statement. This statement 

was based on various sources and included management knowledge gained from the daily operation of agency 

programs and reviews, discussions with senior managers who together comprise the agency’s Senior Policy Group, 

audits of financial statements, annual performance plans, and OIG reports, among other sources. The Senior Policy 

Group is comprised of all SES-level senior executives, including the Director of Operations and General Counsel, 

among others. Additionally, the Commission meets regularly with, and receives regular reports from, the FMC’s 

OIG. 

Management control deficiencies, when identified, are addressed at the highest management levels within the 

agency. For instance, corrective actions for significant deficiencies identified in the agency’s information 

technology area are overseen directly by the agency’s Chief Information Officer (“CIO”). 

Commission Assurance Statement 

The Commission determined that, as of September 30, 2008, the management controls of the FMC provide 

reasonable assurance that the objectives of the FMFIA are being met, and that the FMC, as a whole, is in 

compliance with section 2 of the FMFIA. The FMC’s financial management systems also are in substantial 

compliance with the objectives of the FMFIA, and the Commission is in compliance with section 4 of the FMFIA. 

 

November 17, 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 12

During the fiscal year, the IG identified one significant deficiency (formerly called a "material weakness” by 

OMB) in the information technology (“IT”) program. The OIG’s evaluation found that the FMC consistently 

failed to adequately document key aspects of its information security program, calling into question whether 

required planning and testing activities were performed. Certification and Accreditation (“C&A”) documentation 

reviewed by the OIG did not comply with National Institute of Standards and Technology (“NIST”) or OMB 

requirements for the FMC Network and several mission- critical business applications. Further, it was found that 

FMC’s emergency preparedness documentation and Safety and Security of Employees and Operations Plan / 

Continuity of Operations Plan (“SEOP” / “COOP”) did not address IT recovery in sufficient detail. 

Federal Financial Management Improvement Act 

The Federal Financial Management Improvement Act (“FFMIA”) requires agencies to implement and maintain 

systems that comply substantially with: Federal financial management system requirements; applicable Federal 

accounting standards; and the standard general ledger at the transaction level. The Act requires the agency head to 

determine whether the agency’s financial management systems comply with the FFMIA and to develop 

remediation plans for systems that do not comply. 

FY 2008 Federal Financial Management Improvement Act Results 

The Commission determined that, as of September 30, 2008, the FMC’s financial management systems were in 

substantial compliance with the FFMIA. In making their determination, the Commission considered the results of 

audits conducted by outside auditors in successive fiscal years, in addition to OIG reports, among other resources. 

Prompt Payment Act 

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 2008, the FMC maintained a percentage of on-time payments at 98.41%. The interest 

payments of $321.00 were a direct result of late approvals received from the COTRs of merchandise or services 

received. The FMC will continue to strive towards 100% on-time payments in future years. The FMC has 

maintained a 100% on-time electronic/credit-card payment to its vendors. 

Debt Collection Improvement Act

The Debt Collection Improvement Act enhances the ability of the Government to service and collect debts. The 

Act centralized the collection of non-tax delinquent debt owed to the Government. The collection of delinquent 

debts is conducted by the Financial Management Service through the Treasury Offset Program where the names 

and taxpayer identification numbers (“TIN”) are matched against the TINs of recipients of Government payments. 

The balance owed the Government is deducted or offset from the payment to the entity to satisfy the debt. All 

Office of Personnel Management (“OPM”) retirement, vendor, Internal Revenue Service refunds, Social Security 

Benefits, and some Federal salary payments are being offset. Federal agencies are required to refer delinquent 

accounts in excess of 180 days to Treasury for collection. The goal of the FMC is to minimize the amount of 

delinquent debt owed to the agency. 

Biennial Review of User Fees 

The Chief Financial Officers Act requires agencies to conduct a biennial review of fees and other charges imposed 

by agencies, and to make revisions to cover program and administrative costs incurred. During FY 2008, the FMC 

completed its biennial review of user fees. The OIG conducted an audit of the methodology used to calculate the 

updated user fees. Implementation of new user fee structure is pending. 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
 13 

MANAGEMENT’S DISCUSSION and ANALYSIS 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Performance Measure Summary 

The FMC does not have an in-house financial accounting system, and as a small agency does not receive a 

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

accounting and financial services from the Bureau of Public Debt (“BPD”) located in Parkersburg, WV. The 

Commission verifies and reconciles all financial statements and reports prior to submission, and has remained in 

compliance with all reporting thresholds including FACTS I (Federal Agencies’ Centralized Trial-Balance System) 

reporting and reconciliation of any financial statement differences. 

Inspector General Act 

The FMC has a very good record in resolving and implementing open audit recommendations presented in its OIG 

reports. Section 5(b) of the Inspector General Act requires agencies to report on final actions taken on OIG audit 

recommendations. Information can be found in Chapter 4, Other Accompanying Information. 

Briefly, during FY 2008, the Inspector General completed the following audits/inspections: 

Audit of FY 2007 FISMA Compliance 

Audit of FY 2007 Financial Statements 

Audit of the FMC’s Telephone Services 

Review of Expenses to Furnish, Redecorate or Improve the Offices of FMC Commissioners 

Audit of the Management of BlackBerry Communication Devices 

Audit of the FMC’s Budget Execution Processes, Procedures and Policies for FY 2007 

Audit of FY 2008 FISMA Implementation 

Evaluation Report on Privacy and Data Protection 

IG Assessment of Management Challenges Facing the FMC 

The Inspector General’s reviews disclosed no instances of questioned costs and two recommendations were made 

regarding funds totaling $40,800 which could have been put to better use. The FMC has addressed a number of 

recommendations from these reviews, and it is anticipated that the ones which remain outstanding will be 

completed in FY 2009. 

 

During FY 2008, the agency mitigated four significant deficiencies which had been identified in a previous fiscal 

year. The Inspector General, in his FY 2008 FISMA Review, identified one significant deficiency related to the 

agency information security program; it is anticipated that corrective action on that deficiency will be completed in 

FY 2009.