Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

October 1, 2017 – March 31, 2018 

FEDERAL MARITIME COMMISSION
 
 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

April 27, 2018 

Office of Inspector General 

Dear Acting Chairman Khouri and Commissioners Dye and Maffei: 

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

Act of 1978, as amended. This report summarizes the activities of the Federal Maritime 

Commission (FMC) Office of Inspector General (OIG) for the period October 1, 2017 to March 

31, 2018. 

During this reporting period, the OIG completed two audits and one evaluation; and 

continued another evaluation started in a prior period. Specifically, the OIG completed the fiscal 

year (FY) 2017 annual financial statement audit and the 2017 DATA Act Audit. The OIG also 

completed the FY 2017 annual evaluation of the FMC’s compliance with the Federal Information 

Security Management Act; and continued the evaluation of the FMC’s information technology 

inventory. 

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

leadership and staff. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

Enclosure 
Table of Contents

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

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

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

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

Completed Audits and Evaluation .............................................................................................................................. 3

Open Evaluation ......................................................................................................................................................... 5

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

Memorandum of Understanding ............................................................................................................................... 5

Review of Legislation.................................................................................................................................................. 5

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities....................................................... 6

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS ...........................................................8

TABLE I - Summary of Reports with Corrective Actions Outstanding for More than 6 Months..................9

TABLE II - Listing of Reports Issued ........................................................................................................9

TABLE III - Reports with Questioned Costs ........................................................................................... 10

TABLE IV - Recommendations that Funds be Put to Better Use............................................................. 11

Appendix A - Peer Review Activity....................................................................................................... 12

Pictured: The Port of Long Beach, Long Beach, California.

 Photo courtesy of the Port of Long Beach.
1

EXECUTIVE SUMMARY

This semiannual report summarizes the activities and accomplishments of the Federal 

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

period October 1, 2017 through March 31, 2018. The most significant activities of the OIG during 

the first half of fiscal year (FY) 2018 are summarized below and additional details can be found in 

subsequent sections of this report.

During this reporting period, the OIG completed two audits and one evaluation; and 

continued another evaluation started in a prior period. Specifically, the OIG completed the FY 

2017 annual financial statement audit (A18-01) and the DATA Act Audit, 2017 (A18-03). The 

OIG also completed the FY 2017 annual evaluation of the FMC’s compliance with the Federal 

Information Security Management Act (A18-02); and continued the evaluation of the FMC’s 

information technology inventory (A18-04). The completed assignments are discussed in more 

detail later in this report; assignment A18-04 is expected to be completed in April 2018. 

During the period, the OIG closed one hotline complaint. There were no new 

investigations or matters referred to prosecutorial authorities during this period. At the end of this 

reporting period, one hotline complaint was open and there were no investigations open.

FEDERAL MARITIME COMMISSION

The FMC is an independent federal agency responsible for ensuring a competitive and 

reliable ocean transportation supply system that supports the U.S. economy and protects the public 

from unfair and deceptive practices. The principal statutes or statutory provisions administered by 

the Commission are: the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 

1998; the Foreign Shipping Practices Act of 1988; and Section 19 of the Merchant Marine Act of 

1920.

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

the U.S. Senate, each serving five-year terms. Currently two of the Commissioner positions are

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

maintains a presence in Los Angeles, Seattle, New York, New Orleans, Houston, and South Florida 

through Area Representatives. These Area Representatives serve the major ports and 
2

transportation centers within their respective geographic areas, and provide information, liaison 

and investigatory services on behalf of the FMC. 

OFFICE OF INSPECTOR GENERAL

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

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

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

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

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

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

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

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

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

an audit or investigation.

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

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

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

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

independence of the OIG.

To aid the FMC in accomplishing its mission, the OIG is provided two full-time positions, 

the IG and an auditor. During this reporting period, the OIG worked with the FMC’s Office of 

Human Resources to recruit a student intern under the Pathways Internship Program. The 

Pathways Program can enable a student who successfully completes their academic and program 

requirements to be eligible for non-competitive conversion to a permanent position with the FMC 

OIG. The OIG anticipates appointing an intern during the next reporting period. 
3

OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Audits and Evaluation

Independent Auditors’ Report of the FMC’s FY 2017 Financial Statements, A18-01. 

The audit report was issued on November 7, 2017. The OIG contracted with Dembo Jones, P.C. 

to perform the audit and the OIG actively monitored and reviewed the work and results of the 

contractor. The audit objectives were to opine on whether the FMC’s FY 2017 financial statements 

followed U.S. Generally Accepted Accounting Principles (GAAP) and presented fairly the 

financial position of the agency. The auditors also reviewed internal controls over financial 

reporting and agency compliance with laws and regulations. The statements audited were the 

balance sheet as of September 30, 2017, and the related statements of net cost, changes in net 

position, budgetary resources and custodial activity for the year then ended. 

The independent auditor opined that the FMC’s financial statements were fairly presented, 

in all material respects, in conformity with GAAP; there were no material weaknesses in internal 

control over financial reporting (including safeguarding assets); and no reportable noncompliance 

with laws and regulations tested. Therefore, there were no findings or recommendations in the 

audit report.

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

Act (FISMA) FY 2017, A18-02. The evaluation report was issued on October 31, 2017. The OIG 

contracted with Your Internal Controls, LLC to perform the evaluation and the OIG actively 

monitored and reviewed the work and results of the contractor. The objectives of this independent 

evaluation of the FMC’s information security program were to evaluate its security posture by 

assessing compliance with the FISMA and related information security policies, procedures, 

standards, and guidelines. 

The scope of the testing focused on the FMC General Support Systems (GSS) and major 

applications. Evaluation testing included inquiry of FMC personnel, observation of activities, 

inspection of relevant documentation, and the performance of technical security testing. More 

specifically, testing covered a sample of controls as listed in National Institute of Standards and 

Technology’s (NIST) 800-53, Recommended Security Controls for Federal Information Systems 

and Organizations, Revision 4. The agency continues to make improvements on the agency’s 
4

information technology (IT) security. The evaluation report contained two recommendations to 

address two findings; FMC management agreed with the two recommendations. In addition, the 

OIG concluded the FMC had effectively implemented all six of the prior year FISMA 

recommendations.

DATA Act Audit, 2017, A18-03. The Digital Accountability and Transparency Act of 2014 

(DATA Act) requires federal agencies to report financial and award data in accordance with the 

established Government-wide financial data standards. The DATA Act requires the IG of each 

federal agency to review a statistically valid sample of the spending data submitted by its federal 

agency and to submit to Congress a publicly available report assessing the completeness, 

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

Government-wide financial data standards by the federal agency.

The OIG completed this audit and issued the final report on November 8, 2017. The OIG 

partnered with the Election Assistance Commission (EAC) OIG to complete this audit. The 

objectives of this audit were to assess the FMC’s: (1) completeness, timeliness, quality, and 

accuracy of fiscal year 2017, second quarter financial and award data submitted for publication on 

USAspending.gov; and (2) implementation and use of the Government-wide financial data 

standards established by the Office of Management and Budget (OMB) and Treasury. 

Except for a limited number of exceptions, the OIG determined that the FMC transactions 

audited for publication on USAspending.gov were complete, accurate, timely, and of good quality. 

The OIG recommended the FMC’s Senior Accountable Official (SAO) for the DATA Act should 

develop policies and procedures to enter and report obligations in a manner that ensures they are 

included in the DATA Act reporting process; and ensure that any anomalies are reviewed, 

reconciled, and corrected in a timely manner; FMC management agreed with the recommendation.
5

Open Evaluation

Evaluation of the FMC’s Information Technology Inventory, A18-04. The evaluation

objectives are to assess the quality, completeness, and accuracy of the FMC’s information 

technology (IT) inventory. The scope of the evaluation focused on all IT inventory, such as 

desktops, laptops, servers, printers, monitors, routers, switches, and firewalls. This engagement 

also includes a review of all inventory related policies and procedures, and an inspection of a 

sample of IT assets to assess the effectiveness of the agency’s IT inventory. The OIG plans to 

issue the final audit report in April 2018. 

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. 

During the period, the OIG closed one hotline complaint. There were no new 

investigations or matters referred to prosecutorial authorities during this period. At the end of this 

reporting period, one hotline complaint was open and there were no investigations open.

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 the Inspectors General on 

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

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

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

Review of Legislation

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

proposed legislation and regulations. The purpose of these reviews is to assess whether the 
6

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

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

abuse. 

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

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

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

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

agencies; and 

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

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

workforce in the Office of Inspectors General.

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

Committee is responsible for coordinating government-wide activities that promote economy and 

efficiency in federal programs and operations, and to address areas of weakness and vulnerability 

with respect to fraud, waste, abuse, and mismanagement. The Audit Committee serves as a 

resource for the federal audit community, maintains professional audit standards, and develops 

auditor training requirements. 

The CIGIE is comprised of all inspectors general 

that are Presidentially-appointed / Senate confirmed and 

those that are appointed by agency heads. The FMC OIG 

remains active in CIGIE operations. Specifically, the 

Inspector General (IG) is a member of CIGIE,

participates in the monthly CIGIE meetings, and 

periodically assists CIGIE on special projects. 
7

In 2018, the Inspector General community commemorates the 40th anniversary of the 

Inspector General Act. In October 1978, President Jimmy Carter signed the Act, establishing the 

first twelve presidentially appointed Inspectors General 

in federal departments and agencies. The Act 

empowered the Inspectors General to curb waste, fraud, 

and abuse and promote economy and efficiency in 

government operations. In the 40 years since, the IG 

community has grown to include 73 statutory Inspectors General, both presidentially appointed 

and appointed by agency heads, who collectively oversee the operations of nearly all aspects of 

federal government.
8

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS

IG Act Reference Reporting Requirement Pages

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

None

Section 5(a)(4) Matters referred to prosecutorial authorities and results None

Section 5(a)(5) Summary of instances where information was refused None

Section 5(a)(6) List of audit, inspection, and evaluation reports by subject 

matter, and where applicable, the value of questioned costs, 

unsupported costs, and funds put to better use

9

Section 5(a)(7) Summary of each report 3-4

Section 5(a)(8) Audit, inspection, and evaluation reports with questioned 

and unsupported costs

None

Section 5(a)(9) Audit, inspection, and evaluation report recommendations 

that funds be put to better use

None

Section 5(a)(10) Summary of each audit, inspection, and evaluation report

issued before the commencement of this reporting period for 

which no management decision was made by the end of the 

reporting period; for which comments were not returned 

within 60 days of report issuance; and for which there are 

any outstanding unimplemented recommendations

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 804(b) of the Federal Financial 

Management Improvement Act (FFMIA) of 1996

None

Section 5(a)(14)(15) Peer review activity on FMC OIG 12, App. A

Section 5(a)(16) Peer review activity by FMC OIG on another OIG 12, App. A

Section 5(a)(17) Statistical tables on investigative activities None

Section 5(a)(18) Description of metrics used for developing the data for the 

statistical table under Section 5(a)(17)

None

Section 5(a)(19) Report on each investigation involving a senior Government 

employee where allegations of misconduct were 

substantiated

None

Section 5(a)(20) Description of whistleblower retaliation None

Section 5(a)(21) Description of any attempt by the establishment to interfere 

with the independence of the OIG

None

Section 5(a)(22) Description of particular circumstances of each inspection, 

evaluation, and audit conducted that is closed and was not 

disclosed to the public; and investigation conducted by the 

OIG involving a senior Government employee that is closed 

and was not disclosed to the public

None
9

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

than 6 Months

Recommendations

Report Title Report 

Number

Issue 

Date Number Open Closed

N/A N/A N/A 0 0 0

TABLE II - Listing of Reports Issued

Report Title Assignment 

Number

Issue 

Date 

Questioned 

Costs

Unsupported

Costs

Funds 

Put to 

Better 

Use

Independent Auditors’ 

Report of the FMC’s FY 

2017 Financial Statements

A18-01 11/7/17 $0 $0 $0

Evaluation of FMC’s 

Compliance with the 

Federal Information 

Security Management Act 

(FISMA) FY 2017

A18-02 10/31/17 $0 $0 $0

DATA Act Audit, 2017 A18-03 11/8/17 $0 $0 $0
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
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
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.

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

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

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

During a prior reporting period ending September 30, 2016, the OIG conducted an audit 

peer review of the Election Assistance Commission (EAC) OIG and issued a peer review report 

on July 20, 2016. The FMC OIG issued a modified peer review report to the EAC OIG, and the 

peer review report contained no recommendations. 
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

ONLINE COMPLAINT FORM:

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

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO:

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

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

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR 

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

ADDITIONAL INFORMATION.