Semiannual Report to Congress
 

Covering the Period 


April 1, 2014 – September 30, 2014 


FEDERAL MARITIME COMMISSION
 

Office of Inspector General
 
 

 

 

 

 

Office of Inspector General 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

October 30, 2014 

Dear Chairman Cordero and Commissioners: 

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

Act of 197 8, as am ended. The report summari zes the activ ities of the Office of Inspector 

General (OIG) for the p eriod April 1, 2014 to Septem ber 30, 2014. The Act requires that you 

transmit the report to the appropriate Congressio nal committees within 30 days of receipt. Your 

transmittal should also include an y comments you consider appropriate and other statis tical 

tables and reports required by law. 

I am honored to sub mit this report as the In spector General (IG), having been appointed 

to the IG position on May 18, 2014, following my s hort-term service as the Interim IG. I look 

forward to continuing a positive and effective relationship between the OIG and the agency, and 

it is my expectation and goal to con tinue to improve the high quality of Co mmission programs 

and operations. 

 Respectfully submitted, 

 Jon Hatfield

 Inspector General 

Enclosure 
 

TABLE OF CONTENTS 

Transmittal Letter
 

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

TABLE I – Summary of Audit Reports with Corrective Actions Outstanding for 

FEDERAL MARITIME COMMISSION................................................................................... 2
 

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

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

On-going Audits and Evaluations............................................................................................... 3
 

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

Other Activities........................................................................................................................... 

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

More than 6 Months............................................................................................ 10
 

TABLE II – Listing of Audit Reports Issued ........................................................................... 10
 

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

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

Appendix A – Peer Review Activity ........................................................................................... 13 

6
 
EXECUTIVE SUMMARY

This semiannual report summarizes the activities and accomplishments of the Federal 

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

reporting period April 1, 2014 through September 30, 2014. The most significant activities of 

the OIG during the second half of fiscal year (FY) 2014 are summarized below. Additional 

details pertaining to each activity can be found in subsequent sections of this report. 

During this reporting period, the FMC Commission appointed a new Inspector General 

(IG), Mr. Jon Hatfield, after the resignation of the last permanent IG in January 2013. Between 

the period of January 2013 and May 2014, the Commission designated two individuals to serve 

as Interim IG while a search for a permanent IG was conducted. Mr. Hatfield previously served 

as the Deputy IG of the Federal Election Commission (FEC). Over the past 20 years, Mr. 

Hatfield served at FEC OIG in several executive, managerial, and staff positions. Mr. Hatfield 

has received several awards during his professional career for outstanding accomplishments; 

most notably, the Council of the Inspectors General on Integrity and Efficiency recognized Mr. 

Hatfield for his audit, investigative, and individual accomplishments. In 2009, he was granted a 

graduate certificate by American University for completion of the University’s Key Executive 

Leadership Certificate Program for Inspector General Leaders. Mr. Hatfield holds a B.B.A. in 

Accounting from Radford University and is a Certified Fraud Examiner and Certified Public 

Accountant in the state of Virginia. 

In addition to Mr. Hatfield’s appointment, there were two OIG staff vacancies during this 

reporting period, one that occurred in December 2013, and the other in May 2014. The OIG 

initiated measures to address the vacant positions: the OIG entered into a memorandum of 

understanding (MOU) with the FEC OIG for legal services on a reimbursable basis; and the 

office began recruitment for a program audit and investigation specialist. 

During this period, the OIG had three audits and two evaluations open and at various 

stages of progress. The OIG’s Independent Auditors’ Report of the FMC’s FY 2014 Financial 

Statements and Evaluation of the FMC’s Compliance with the Federal Information Security 

April 1, 2014 – September 30, 2014 Page 1 
   

 

   

Management Act FY 2014 were both started during this reporting period and expected to be 

completed by November 2014. In addition, the OIG commenced a new evaluation in September 

2014 on the FMC’s Workplace Environment. The OIG’s Audit of Expenditures for Furnishing 

or Re-decorating Commissioners’ Offices was in the report phase and an audit of the FMC’s 

physical security operations was on-hold due to the OIG’s vacant audit position. The OIG 

expects to complete the furniture and physical security audits after the OIG has hired the new 

program audit and investigation specialist. 

During this reporting period, the OIG received several hotline complaints through its 

anonymous webmail; some of these complaints were forwarded to the appropriate FMC program 

areas for disposition. One administrative investigation was in progress and five hotline 

complaints were pending at the close of this reporting period. The OIG opened no new 

investigations and referred no matters to prosecutorial authorities during this period. 

FEDERAL MARITIME COMMISSION

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

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

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

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

19 of the Merchant Marine Act of 1920. 

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

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

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

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

transportation centers within their respective geographic areas. 

OFFICE OF INSPECTOR GENERAL

The OIG was established in 1989 by the Inspector General Act of 1978, as amended (5 

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

April 1, 2014 – September 30, 2014 Page 2 
       

     

 

reports to the FMC Commissioners. To aid the FMC in accomplishing its mission, the OIG is 

provided two full-time positions. 

The OIG is responsible for conducting audits and investigations relating to the programs 

and operations of the FMC. Audits are conducted for the purpose of finding and preventing 

fraud, waste and abuse, and promoting economy, efficiency and effectiveness within the agency. 

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

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

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

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

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

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

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

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

of the OIG. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES

On­going Audits and Evaluations

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

Act FY 2014. The objectives of the independent evaluation of the FMC’s information security 

program are to evaluate its security posture by assessing compliance with the Federal 

Information Security Management Act (FISMA) and related information security policies, 

procedures, standards, and guidelines. The scope of this task includes the FMC network and 

applications housing service contracts, tariff location filings, and FMC license applications. The 

OIG will evaluate potential system vulnerabilities and assess management actions to implement 

prior-year recommendations. 

Independent Auditors’ Report of FMC’s FY 2014 Financial Statements. The audit 

objectives are to opine on whether the FMC’s FY 2014 financial statements follow U.S. 

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

April 1, 2014 – September 30, 2014 Page 3 
The OIG also will review internal controls over financial reporting and agency compliance with 

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

2014 and 2013, and the related Statements of Net Cost, Statements of Changes in Net Position, 

Statements of Budgetary Resources and Statements of Custodial Activity. 

OIG Evaluation of the FMC’s Workplace Environment. The OIG identified workplace 

satisfaction at the FMC as an agency management challenge in 2013. In December 2012, the 

Partnership for Public Service (PPS), a nonprofit organization that works to revitalize the Federal 

government, released its annual rankings for the Best Places to Work in the Federal Government. 

The December 2012 report ranked the FMC the second lowest of small agencies. The PPS uses 

data from the Office of Personnel Management’s (OPM) Federal Employee Viewpoint Survey to 

rank agencies according to a Best Places to Work index score. OPM surveys agency employees 

and then the agency is measured on overall employee satisfaction, as well as 10 workplace 

categories, such as effective leadership, employee skills/mission match, pay, teamwork and 

work/life balance. Since 2012, there has been some improvement in the survey results, but there 

is still opportunity for improvement. 

In order to evaluate the FMC’s workplace environment, the OIG initiated an independent 

evaluation in September 2014. Through a competitive bid process, the OIG contracted with an 

organization with expertise in this area to evaluate the FMC’s workplace environment. The 

objectives are to evaluate: (1) the historical and most recent OPM Federal Employee Viewpoint 

Survey results for the FMC; (2) the effectiveness of the agency to implement corrective action 

related to workplace issues requiring improvement; (3) and provide recommendations for 

improvement, where warranted. 

The OIG’s evaluation should result in a detailed assessment of the strengths and 

weaknesses of the FMC’s workplace environment. The evaluation will involve analysis of 

current and historical Viewpoint survey results; several workshops and one-on-one meetings 

with staff at all levels of the agency; as well as an action planning session with management 

officials able to effect positive change within the agency. The OIG expects to complete the 

evaluation and issue the final report in late 2014. 

April 1, 2014 – September 30, 2014 Page 4 
   

Audit of Expenditures for Furnishing or Re-decorating Commissioners’ Offices. In a 

prior reporting period, the OIG decided to initiate this review after the FMC received a request, 

on May 9, 2012, from the Committee on Oversight and Government Reform to provide a 

complete account for all purchases made for the previous Chairman. The objectives of the audit 

were to determine whether the Commission complies with applicable laws and regulations 

regarding expenses associated with furnishing, redecorating, or making improvements to 

Commissioners’ offices. Specifically, we performed this review to determine whether the 

Commissioners stayed within their $5,000 statutory spending limit and to determine whether 

these expenses are recorded and tracked during the term, reappointment or hold over of office for 

each Presidential-appointee. 

Fieldwork has been completed and an exit conference will be scheduled to discuss the 

results of the audit and issue the draft audit report to FMC management. The final audit report 

will then be issued after review and comment by FMC management. 

Audit of FMC’s Physical Security – Datawatch. This audit was incorporated into the 

OIG’s annual audit plan. The objective of the audit is to determine the effectiveness of the 

Datawatch security system, assess the cost efficiency of the program and review the internal 

controls regarding the security information generated from the system. Due to higher priority 

assignments and an OIG staff vacancy, this assignment was put on-hold during a previous 

reporting period. The audit is expected to be continued after the OIG hires the new program 

audit and investigation specialist. 

Hotline and Investigations

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

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

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

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

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

April 1, 2014 – September 30, 2014 Page 5 
At the beginning of this reporting period, one administrative investigation was in 

progress and two hotline complaints were pending. 

During this reporting period, the OIG received 14 new hotline complaints. Nine of the 

14 hotline complaints were reviewed and closed by the OIG because the matters were outside the 

OIG’s jurisdiction. The nine complaints were referred to the agency for disposition (i.e. FMC 

Consumer Affairs & Dispute Resolution Services, Bureau of Certification and Licensing, and 

Bureau of Enforcement). Two of the new complaints were similar to existing complaints and 

merged with those hotline complaints. The other three new complaints were pending at the end 

of this reporting period. 

At the end of this reporting period, one administrative investigation was open and a total 

of five hotline complaints were pending. The OIG opened no new investigations and referred no 

matters to prosecutorial authorities during this period. 

Other Activities

Peer Review

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

every three years. These reviews are to be performed only by federal auditors. A committee of 

the Council of Inspectors General on Integrity and Efficiency (CIGIE) schedules the review to 

ensure that resources are available to perform the review and that OIGs do not conduct reciprocal 

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

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

applicable government auditing standards are being followed. 

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

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

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

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

April 1, 2014 – September 30, 2014 Page 6 
   

   

     

statement identifying the date of the last peer review conducted by another OIG. Please see 

appendix A for additional information. 

Memorandum of Understanding

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

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

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

General on Integrity and Efficiency (CIGIE) on a reimbursable basis. The OIG signed a 

Memorandum of Understanding (MOU) with the Federal Election Commission OIG under 

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

Review of Legislation

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

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

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

and operations; and (2) contains adequate internal controls to prevent and detect fraud and abuse. 

Inspector General Working Group

The Inspector General served on a Working Group of 15 IGs during the reporting period 

regarding oversight of Federal entities. In the first half of 2014, a discussion draft for possible 

legislation suggested that additional entities throughout the Federal government warranted 

oversight by an Office of Inspector General (OIG); 63 small federal entities without OIGs were 

identified for consideration. The Working Group of IGs reviewed the discussion draft, evaluated 

pertinent issues, and developed recommendations for achieving enhanced, right-sized OIG 

oversight of the selected Executive Branch entities currently without OIGs. The Working Group 

gathered and analyzed a comprehensive range of overarching and entity-specific data, reviewed 

relevant legislative history, consulted with stakeholders, and drew upon collective expertise and 

experience in overseeing a wide range of OIG programs. A final report on the Working Group’s 

findings and recommendations is expected to be issued during the next reporting period. 

April 1, 2014 – September 30, 2014 Page 7 
               

 

Council of Inspectors General on Integrity and Efficiency Activities

The Council of Inspectors General on Integrity and Efficiency (CIGIE) was established 

by law as an independent entity by the Inspector General Reform Act of 2008 (P.L. 110-409) to: 

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

agencies; and 

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

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

workforce in the Office of Inspectors General. 

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

Senate confirmed and those that are appointed by agency heads -- designated federal entities. 

The FMC OIG remains active in CIGIE operations. Specifically, the Inspector General is a 

member of CIGIE and participates in the monthly CIGIE meetings. 

Employee Recognition

On September 16, 2014, Inspector 

General (IG) Jon Hatfield received 

recognition from his former agency, the 

Federal Election Commission (FEC) OIG. 

FEC IG Lynne A. McFarland and Deputy IG 

J. Cameron Thurber presented a plaque 

acknowledging Mr. Hatfield’s service to the 

FEC OIG that spanned over 20 years, from 

February 1994 to May 2014. 

April 1, 2014 – September 30, 2014	 Page 8 
 

 

 

 

 

 

SUMMARY OF INSPECTOR GENERAL
 

REPORTING REQUIREMENTS
 

IG Act Reference Reporting Requirement Pages 

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

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

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

problems, abuses, or deficiencies 

None 

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

corrective actions have not been completed 

10 

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

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

refused 

None 

Section 5(a)(6) List of audit reports by subject matter None 

Section 5(a)(7) Summary of each particularly significant report None 

Section 5(a)(8) Statistical table Reports with questioned costs 11 

Section 5(a)(9) Statistical table recommendations that funds be put to 

better use 

12 

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

period for which no management decision was made 

by the end of the reporting period 

None 

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

management decisions 

None 

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

inspector general disagrees 

None 

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

Management Improvement Act (FFMIA) of 1996 None 

Section 5(a)(14) Peer Review Activity 6, App. A 

April 1, 2014 – September 30, 2014 Page 9 
 

 

 

TABLE I – Summary of Audit Reports with 

Corrective Actions Outstanding for More than 6 Months 

Recommendations 

Report Title Report 

Number 

Issue 

Date Number Open Closed 

FY 2013 Implementation 

of FISMA 

A14-02 1/03/14 12 3 9 

FY 2012 Privacy and Data 

Protection 

A13-02 12/6/12 5 0 5 

Review of FMC’s User 

Fee Calculations 

OR10-03 5/27/10 1 1 0 

TABLE II - Listing of Audit Reports Issued 

Report 

Number 

Issue 

Date 

Report Title Questioned 

Costs 

Unsupported 

Costs 

Funds Put to 

Better Use 

NONE $0 $0 $0 

April 1, 2014 – September 30, 2014 Page 10 
TABLE III 

Reports with Questioned Costs
 

Number 

of 

Reports 

Questioned 

Costs 

Unsupported 

Costs 

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0 

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

Subtotal (A + B) 0 $0 $0 

C. For which a management decision was made 

during the reporting period. 

0 $0 $0 

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

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

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0 

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0 

April 1, 2014 – September 30, 2014 Page 11 
 

TABLE IV 

Recommendations That Funds Be Put To Better Use 

Number 

of 

Reports Dollar Value 

A. For which no management decision has been made 

by the commencement of the reporting period. 0 $0 

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

Subtotal (A + B) 0 $0 

C. For which a management decision was made during 

the reporting period. 0 $0 

(i) dollar value of recommendations that were 

agreed to by management; and 

0 $0 

(ii) dollar value of recommendations that were not 

agreed to by management 

0 $0 

D. For which no management decision has been made 

by the end of the reporting period. 0 $0 

E. Reports for which no management decision was 

made within six months of issuance 0 $0 

April 1, 2014 – September 30, 2014 Page 12 
   

   

Appendix A

Peer Review Activity

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

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

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

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

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

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

The Postal Regulatory Commission (PRC) OIG conducted an audit peer review of the 

FMC OIG in a prior reporting period. A final system review report was issued to the FMC OIG 

on March 28, 2013; this office received a pass rating. There were no weaknesses or 

recommendations identified in the system review report. 

April 1, 2014 – September 30, 2014 Page 13 
 

HOTLINE COMPLAINTS
 

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

depends on the cooperation of FMC employees and the public. 

Employees and the public are encouraged to contact the OIG 

regarding any incidents of possible waste, fraud or abuse occurring 

within FMC programs and operations. 

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

(202) 523-5865 

E-MAIL ADDRESS: OIG@FMC.GOV 

OR 

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO: 

Federal Maritime Commission 

Office of Inspector General 

Room 1054 

800 North Capitol Street, NW 

Washington, DC 20573 

To Be Opened By the IG Only 

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL AND YOU CAN BE ANONYMOUS. 

HOWEVER, CALLERS ARE ENCOURAGED TO ASSIST THE INSPECTOR GENERAL BY 

SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR ADDITIONAL 

INFORMATION.