FEDERAL MARITIME COMMISSION

Office of Inspector General

Independent Auditors’ Report 

of the

FMC’s FY 2013 Financial Statements

A14-01 

December 2013
DERAL MARITIME COMMISSION

Washington, DC 20573

December 12, 2013 

Office of Inspector General

Dear Chairman Cordero and Commissioners: 

I am pleased to provide you with the attached audit report required by the Accountability 

for Tax Dollars Act of 2002 ( ATDA), which presents an unqualified (clean) opinion on t he 

Federal Maritime Commission’s (FMC) fiscal year (FY) 2013 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 unqualified 

opinion. 

The OIG contracted with the independent certified public accounting firm of Regis & 

Associates, P.C. (Regis) to perform the audit of the FMC’s financial statements for the fiscal year 

ended September 30, 2 013; 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 Federal Maritime Commission, Regis found: the financial statements 

were fairly presented, in all material respects, in conformity with U.S. generally accepted 

accounting principles; there were no m aterial weaknesses in internal control over financial 

reporting; and no reportable noncompliance issues with the laws and regulations tested. 

Regis & Associates is responsible for the attached auditor’s report and the conclusions 

expressed in the report. The OIG does not express opinions on FMC’s financial statements or 

internal control; or conclusions on compliance with laws and regulations. 

 

Respectfully submitted,

 /Jon Hatfield/ 

 Interim Inspector General

Enclosure
MANAGEMENT CONSULTANTS & 

 CERTIFIED PUBLIC ACCOUNTANTS

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2013 and 2012 
REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2013 and 2012 

TABLE OF CONTENTS

Independent Auditors' Report .......................................................................................... 1-4 

Balance Sheet .......................................................................................................................5 

Statement of Net Cost ..........................................................................................................6 

Statement of Changes in Net Position .................................................................................7 

Statement of Budgetary Resources ......................................................................................8 

Statement of Custodial Activity ...........................................................................................9 

Notes to Financial Statements ...................................................................................... 10-21 

Agency Comments on Draft Audit Report (Appendix A) ........................................... 22-23 
MANAGEMENT CONSULTANTS &

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

The Honorable Mario Cordero

Chairman

Federal Maritime Commission

Washington, DC 

The Accountability of Tax Dollars Act of 2002 made the Federal Maritime Commission subject 

to the annual financial statement reporting requirements of the Chief Financial Officers’ Act of 

1990, which requires agencies to report annually to Congress on their financial status; and any 

other information needed to fairly present the agencies’ financial position and results of 

operations. 

We have audited the accompanying balance sheet of the Federal Maritime Commission, as of 

September 30, 2013 and 2012, and the related statements of net cost, changes in net position, 

budgetary resources, and custodial activity, for the years then ended (hereinafter referred to as 

“financial statements” or “basic financial statements”). The objective of our audits was to 

express an opinion on the fair presentation of these financial statements. In connection with our 

fiscal year 2013 and 2012 audits, we also considered Federal Maritime Commission’s internal 

control over financial reporting; and tested the agency's compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

financial statements.

Summary 

As stated in our opinion on the financial statements, we concluded that Federal Maritime 

Commission’s financial statements as of, and for the years ended, September 30, 2013 and 2012, 

are presented fairly, in all material respects, in conformity with U.S. Generally Accepted 

Accounting Principles. 

Our consideration of internal control over financial reporting was not designed to identify all 

deficiencies in internal control over financial reporting that might be deficiencies, significant 

deficiencies, or material weaknesses. We did not identify any deficiencies in internal control 

over financial reporting that we consider to be material weaknesses, as defined in the Internal 

Control over Financial Reporting section of this report. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts 

disclosed no instances of noncompliance or other matters that are required to be reported herein 

under Government Auditing Standards, issued by the Comptroller General of the United States; 

and Office of Management and Budget (OMB) Bulletin Number (No.) 14-02, Audit 

Requirements for Federal Financial Statements. 

The following sections discuss our opinion on Federal Maritime Commission’s financial 

statements; our consideration of internal control over financial reporting; our tests of the 

agency’s compliance with certain provisions of applicable laws, regulations, and contracts; and 

management’s and our responsibilities. 

1400 Eye Street, NW, Suite 425, Washington, DC 20005 Tel 202-296-7101 Fax 202-296-7284
2

Opinion on the Financial Statements 

We have audited the accompanying balance sheet of Federal Maritime Commission as of 

September 30, 2013 and 2012, and the related statements of net cost, changes in net position, 

budgetary resources, and custodial activity for the years then ended. 

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

the financial position of Federal Maritime Commission as of September 30, 2013 and 2012, and 

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

then ended, in conformity with U.S. Generally Accepted Accounting Principles. 

Report on Internal Control over Financial Reporting 

In planning and performing our audit of the financial statements of Federal Maritime 

Commission as of, and for the year ended, September 30, 2013 and 2012, in accordance with 

auditing standards generally accepted in the United States of America, we considered Federal 

Maritime Commission’s internal control over financial reporting (internal control) as a basis for 

designing audit procedures that are appropriate in the circumstances for the purpose of 

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

opinion on the effectiveness of Federal Maritime Commission’s internal control. We limited our 

internal control testing to those controls necessary to achieve the objectives described in OMB 

Bulletin No. 14-02. We did not test all internal controls relevant to operating objectives, as 

broadly defined by the Federal Managers’ Financial Integrity Act of 1982, such as those 

controls relevant to ensuring efficient operations. The objective of the audit was not to provide 

assurance on internal control or on the effectiveness on Federal Maritime Commission’s internal 

control. Accordingly, we do not express an opinion on the effectiveness of the Federal Maritime 

Commission’s internal control. 

Our consideration of internal control 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.

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 agency’s financial statements will not be 

prevented, or detected and corrected, on a timely basis. 

Our consideration of internal control was for the limited purpose described above, and would not 

necessarily identify all deficiencies in internal control that might be significant deficiencies or 

material weaknesses. We did not identify any deficiencies in internal control that we consider to 

be material weaknesses, as defined above. The objective of our audit was not to provide 

assurance on these internal controls. Accordingly, we do not provide an opinion on such 

controls. 
3

Report on Compliance with Applicable Provisions of Laws, Regulations, and Contracts 

As part of obtaining reasonable assurance about whether Federal Maritime Commission’s

financial statements are free of material misstatements, we performed tests of compliance with 

selected provisions of applicable laws, regulations, and contracts; noncompliance with which 

could have a direct and material effect on the determination of financial statement amounts, and 

certain laws, regulations, and contracts specified in OMB Bulletin No. 14-02, except for those 

instances of noncompliance that in the auditor’s judgment, are clearly inconsequential. We 

limited our tests of compliance to these provisions, and did not test compliance with all laws, 

regulations, and contracts applicable to the Federal Maritime Commission. 

The results of our tests of compliance with laws, regulations, and contracts disclosed no instance 

of noncompliance that would be reportable under U.S. Generally Accepted Government 

Auditing Standards, or OMB audit guidance. 

Providing an opinion on compliance with laws, regulations and contracts was not an objective of 

our audit, and accordingly, we do not express such an opinion. 

Responsibilities 

Management's Responsibilities: Management is responsible for the financial statements; 

establishing and maintaining effective internal control over financial reporting; preparing the 

Management Discussion and Analysis (MD&A) and Required Supplementary Information 

(RSI); and complying with laws, regulations, and contracts applicable to Federal Maritime 

Commission. 

Auditors' Responsibilities: Our responsibility is to express an opinion on the fiscal year 2013 

and 2012 financial statements of Federal Maritime Commission, 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 Government 

Auditing Standards, issued by the Comptroller General of the United States; and OMB Bulletin 

No. 14-02. Those standards and OMB Bulletin No. 14-02, require that we plan and perform the 

audits to obtain reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes consideration of internal control over financial reporting as a 

basis for designing audit procedures that are appropriate in the circumstances, but not for the 

purpose of expressing an opinion on the effectiveness of Federal Maritime Commission’s

internal control over financial reporting. Accordingly, we express no such opinion. 

An audit also includes: 

• Examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements; 

• Assessing the accounting principles used, and significant estimates made by 

management; and 

• Evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 
4

Other Accompanying Information 

Accounting principles generally accepted in the United States of America, and Government 

Auditing Standards, issued by the Comptroller General of the United States require that the other 

accompanying information included in the Required Supplementary Information (RSI) section of 

the Performance and Accountability Report, be presented to supplement the basic financial 

statements. Such information, although not a part of the basic financial statements, is required 

by the Federal Accounting Standards Advisory Board, OMB Bulletin 14-02; and OMB Circular 

A-136, revised, Financial Reporting Requirements, which consider it to be an essential part of 

financial reporting for placing the basic financial statements in an appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the Management 

Discussion and Analysis (MD&A); and Required Supplementary Information, in accordance 

with auditing standards generally accepted in the United States of America, which consisted of 

inquires of management about the methods of preparing the information; and comparing the 

information for consistency with management’s responses to our inquiries, the basic financial 

statements, and other knowledge we obtained during our audit of the basic financial statements. 

We do not express an opinion or provide any assurance on the information because the limited 

procedures do not provide us with sufficient evidence to express an opinion or provide any 

assurance.

This report is intended solely for the information and use of those charged with governance and 

management of the Federal Maritime Commission, others within the organization, the Office of 

Inspector General, OMB, the U.S. Government Accountability Office, and the U.S. Congress; 

and is not intended to be, and should not be, used by anyone other than these specified parties. 

Agency Comments and Our Evaluation 

The Federal Maritime Commission concurred with the facts and conclusions in our report. See 

Appendix A. 

/Regis & Associates, PC/ 

Washington, DC 

December 2, 2013 
The accompanying notes are an integral part of these financial statements

 

5 

FEDERAL MARITIME COMMISSION

BALANCE SHEET

AS OF SEPTEMBER 30, 2013 AND 2012

(IN DOLLARS)

2013 2012 

Assets:

Intragovernmental:

Fund Balance With Treasury (Note 2) $ 2,620,747 $ 4,254,644

 Total Intragovernmental 2,620,747 $ 4,254,644

 Accounts Receivable, Net (Note 3) 273 4,031

 Property, Equipment, and Software, Net (Note 4) 345,626 420,323

Total Assets $ 2,966,646 $ 4,678,998

Liabilities:

Intragovernmental: Accounts Payable $ 150,929 $ 201,490

Employer Contributions and Payroll Taxes Payable (Note 5) 74,318 191,260

Unfunded FECA Liability (Note 5) 200 324

Custodial Liability (Note 5) 273 256

 Total Intragovernmental $ 225,720 $ 393,330

 Accounts Payable 233,037 177,008

 Federal Employee and Veterans' Benefits (Note 5) 6,912 5,910

 Accrued Liabilities 311,832 901,485

Employee Contributions and Payroll Taxes Payable (Note 5) 30,391 24,363

 Unfunded Leave (Note 5) 1,249,227 1,276,758

Total Liabilities $ 2,057,119 $ 2,778,854

Net Position:

 Unexpended Appropriations - Other Funds $ 1,820,115 $ 2,759,038

Cumulative Results of Operations - Other Funds (910,588) (858,894)

Total Net Position $ 909,527 $ 1,900,144

Total Liabilities and Net Position $ 2,966,646 $ 4,678,998
 

The accompanying notes are an integral part of these financial statements

 

6 

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012

(IN DOLLARS)

2013 2012 

Gross Program Costs:

Operational and Administrative Gross Costs $ 16,102,932 $ 16,908,154

 Less: Earned Revenue - (41,676)

 Net Program Costs $ 16,102,932 $ 16,866,478

Formal Proceedings Gross Costs $ 7,603,646 $ 7,374,383

 Net Program Costs $ 7,603,646 $ 7,374,383

Office of Inspector General Gross Costs $ 634,730 $ 743,557

 Less: Earned Revenue (20,410) (12,984)

 Net Program Costs $ 614,320 $ 730,573

Office of Equal Employment Opportunity Gross Costs $ 195,312 $ 193,612

 Net Program Costs $ 195,312 $ 193,612

 Net Cost of Operations (Note 8) $ 24,516,210 $ 25,165,046
 

The accompanying notes are an integral part of these financial statements

 

7 

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012

(IN DOLLARS)

2013 2012

Cumulative Results of Operations: 

 Beginning Balances $ (858,894) $ (712,825)

Budgetary Financing Sources:

 Appropriations Used 23,046,477 23,560,395

Other Financing Sources (Non-Exchange): 

 Imputed Financing Sources (Note 9) 1,418,039 1,458,582

 Total Financing Sources 24,464,516 25,018,977

 Net Cost of Operations (24,516,210) (25,165,046)

 Net Change (51,694) (146,069)

Cumulative Results of Operations $ (910,588) $ (858,894)

Unexpended Appropriations:

 Beginning Balances $ 2,759,038 $ 2,378,313

Budgetary Financing Sources:

 Appropriations Received 24,100,000 24,100,000

 Other Adjustments (1,992,446) (158,880)

 Appropriations Used (23,046,477) (23,560,395)

 Total Budgetary Financing Sources (938,923) 380,725

 Total Unexpended Appropriations $ 1,820,115 $ 2,759,038

Net Position $ 909,527 $ 1,900,144
The accompanying notes are an integral part of these financial statements

 

8 

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012

(IN DOLLARS)

2013 2012

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 1,285,050 $ 1,245,904

Recoveries of Prior Year Unpaid Obligations 228,121 182,051

Other changes in unobligated balance (783,029) (158,881)

 Unobligated balance from prior year budget authority, net 730,142 1,269,074

 Appropriations (discretionary and mandatory) 22,839,425 24,100,000

 Spending authority from offsetting collections 23,614 54,660

Total Budgetary Resources $ 23,593,181 $ 25,423,734

Status of Budgetary Resources:

 Obligations Incurred (Note 11) $ 23,007,870 $ 24,138,684

 Unobligated balance, end of year: Apportioned 10,251 86,652

Unapportioned 575,060 1,198,398

 Total unobligated balance, end of year 585,311 1,285,050

Total Budgetary Resources $ 23,593,181 $ 25,423,734

Change in Obligated Balance

 Unpaid Obligations: Unpaid Obligations, Brought Forward, October 1 $ 2,969,594 $ 2,546,766

 Obligations Incurred (Note 11) 23,007,870 24,138,684

 Outlays (gross) (23,713,907) (23,533,805)

 Recoveries of Prior Year Unpaid Obligations (228,121) (182,051)

 Unpaid Obligated Balance, End of Year $ 2,035,436 $ 2,969,594

Budget Authority and Outlays, Net:

 Budget authority, gross $ 22,863,039 $ 24,154,660

 Actual offsetting collections (23,614) (54,660)

 Budget Authority, net $ 22,839,425 $ 24,100,000

 Outlays, gross $ 23,713,907 $ 23,533,806

 Actual offsetting collections (23,614) (54,660)

 Outlays, net 23,690,293 23,479,146

 Distributed Offsetting Receipts (2,816,990) 664,935

 Agency outlays, net $ 20,873,303 $ 24,144,081
 

The accompanying notes are an integral part of these financial statements

 

9 

FEDERAL MARITIME COMMISSION

AS OF SEPTEMBER 30, 2013 AND 2012

STATEMENT OF CUSTODIAL ACTIVITY

(IN DOLLARS)

2013 2012

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 3,319,566 $ 1,006,298

Total Custodial Revenue (Note 13) 3,319,566 1,006,298

Disposition of Collections: 

Transferred to Others (by Recipient) 3,319,566 1,006,298

Net Custodial Activity $ - $ -
 

10 

 

FEDERAL MARITIME COMMISSION 

NOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The Federal Maritime Commission (FMC) was established as an independent regulatory agency 

on August 12, 1961. The FMC is responsible for the regulation of ocean borne transportation in 

the foreign commerce of the United States (U.S.). The principal statutes or statutory provisions 

administered by the FMC are the Shipping Act of 1984, a s amended by the Ocean Shipping 

Reform Act (OSRA) 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 FMC monitors the activities of ocean common carriers, marine terminal operators (MTOs), 

agreements among ocean common carriers and/or MTOs, ports and ocean transportation 

intermediaries (OTI), and (nonvessel-operating 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 A ct; 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 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 nonrecurring 

activity, such as fines, penalties, fees, and other miscellaneous receipts for services and benefits.
11 

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

The FMC makes custodial collections and holds custodial receivables that are non-entity assets, 

which 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.

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 agency. 

The Statement of Net Cost presents the agency’s operating results; the Statement of Changes in 

Net Position displays the changes in the agency’s equity accounts. The Statement of Budgetary 

Resources presents the sources, status, and uses of the agency’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, the Government 

Management Reform Act of 1994, and the Accountability of Tax Dollars Act of 2002. 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. 

FMC does not maintain bank accounts of its own, has no di sbursing authority, and does not 

maintain cash held outside of Treasury. Treasury disburses funds for FMC on demand. 
12 

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

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 no t 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 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.
13 

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

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. Nonvested 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, effective at 50%, beginning FY 2010; and 100% 

in 2014. 

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 the net 

present value of estimated future payments calculated by the DOL.

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 t hrough 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 
14 

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

automatically covered by the FERS program. Both CSRS and FERS employees may participate 

in the Federal Thrift Savings Plan (TSP). FERS employees receive an automatic agency 

contribution equal to 1% of pay, and FMC matches any employee contribution up t o 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. 

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 recognizes 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, are 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 2013 and 2012 to the extent 

directed by accounting standards. 
15 

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

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. 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. Reclassifications 

Certain fiscal year 2012 balances have been reclassified, re-titled, or combined with other 

financial statement line items for consistency with the current year presentation.

NOTE 2- FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2013 and 2012 are as 

follows:

 2013 2012

Fund Balances: 

 Appropriated Funds

Total

$ 2,620,747

$ 2,620,747

$ 4,254,644

 $ 4,254,644

Status of Fund Balance with Treasury:

 Unobligated Balance

 Available $ 10,251 $ 86,652

 Unavailable 575,060 1,198,398

 Obligated Balance Not Yet Disbursed 

Total

2,035,436

$ 2,620,747

2,969,594

$ 4,254,644

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. 
16 

NOTE 2- FUND BALANCE WITH TREASURY Cont’d

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 12). 

NOTE 3- ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2013 and 2012, are as follows:

2013 2012

With the Public Accounts Receivable $ 273 $ 4,031 

Total Accounts Receivable $ 273 $ 4,031 

The accounts receivable is primarily made up of bills to public for goods and services. Historical 

experience has indicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2013 and 2012. 

NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE

The Schedule of Property, Equipment, and Software as of September 30, 2013 is as follows:

 

Accumulated

Acquisition Amortization/ Net Book 

Major Class Cost Depreciation Value

Leasehold Improvements $ 225,000 $ 202,500 $ 22,500

Furniture & Equipment 315,251 202,704 112,547

Software-in-Development 210,579

Total $ 750,830

 - 210,579

 $ 405,204 $ 345,626

chedule of Property, Equipment, and Software as of September 30, 2012 is as follows: 

Accumulated

Acquisition

Major Class Cost

Amortization/ Net Book

Depreciation Value

Leasehold Improvements $ 225,000 $ 157,500 $ 67,500

Furniture & Equipment 315,250 143,006 172,244

Software-in-Development 180,579

Total $ 720,829

 - 180,579

 $ 300,506 $ 420,323

S

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 201 3 and 2012 i nclude 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.
17 

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES Cont’d

 2013 2012

Intragovernmental – FECA $ 200 $ 324

Unfunded Leave 1,249,227 1,276,758

Actuarial FECA 6,912 5,910

Total Liabilities Not Covered by Budgetary Resources $ 1,256,339 $ 1,282,992

Total Liabilities Covered by Budgetary Resources

Total Liabilities

 800,780

 $ 2,057,119

1,495,862

$ 2,778,854

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- 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 2013 and 2012 w ere $2,985,156 and $2,965,085, r espectively. The lease 

locations and terms are listed below:

Location Term Lease Expiration Date

Washington, DC 10 years 10/31/2022

Jamaica, NY 5 years *07/01/2013

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

*Lease is currently month-to-month until new space in Iselin, NJ is completed.
18 

NOTE 6- OPERATING LEASES Cont’d

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

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

Fiscal Year

 

Totals

2014 $ 3,141,257

2015 3,156,813

2016 3,187,748

2017 3,219,611

2018 3,445,105

Thereafter

Total Future Minimum Payments

10,544,535

$ 26,695,069

NOTE 7- 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. There was one legal action pending 

against FMC, with an estimated possible liability of $300,000 i n FY 2012. The FMC has no 

knowledge of lawsuits/investigations arising from FMC operations in FY 2013. 

NOTE 8- 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: 

 2013 2012

Operational and Administrative 

Intragovernmental Costs 

Public Costs

 $ 4,592,510

 11,510,422

 $ 4,811,649

 12,096,505

Total Program Costs 16,102,932 16,908,154

Less: Intragovernmental Earned Revenue - (41,676)

Net Program Costs 16,102,932 16,866,478

Formal Proceedings

Intragovernmental Costs 1,304,358 1,529,477

Public Costs 6,299,288 5,844,906

Total Program Costs 7,603,646 7,374,383

Net Program Costs 7,603,646 7,374,383

Office of Inspector General

Intragovernmental Costs 115,130 129,247

Public Costs 519,600 614,311

Total Program 634,730 743,558

Less: Intragovernmental Earned Revenue (20,410) (12,984)

Net Program Costs 614,320 730,574
19 

NOTE 8- INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE Cont’d

 2013 2012

Office of Equal Employment Opportunity

Intragovernmental Costs $ 19,624 $ 28,548

Public Costs 175,688 165,063

Total Program Costs 195,312 193,612

Net Program Costs 195,312 193,612

Net Cost of Operations $ 24,516,210 $ 25,165,046

Total Intragovernmental costs 6,031,622 6,498,922

Total Public Costs 18,504,998 18,720,784

Total Costs 24,536,620 25,219,706

Less: Total Intragovernmental Earned Revenue (20,410) (54,660)

Net Cost of Operations $ 24,516,210 $ 25,165,046

NOTE 9- 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 fiscal years ended September 30, 2013 a nd 2012, i mputed financing was as 

follows: 

 2013 2012

Office of Personnel Management $ 1,418,039 $1,458,582

Total Imputed Financing Sources $ 1,418,039 $1,458,582

NOTE 10- BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President’s budget that will include fiscal year 2013 actual budgetary execution information 

has not yet been published. The President’s budget is scheduled for publication in February 

2014, and will be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2013 

Budget of the United States Government, with the "Actual" column completed for 2012, ha s 

been reconciled to the Statement of Budgetary Resources and there were no material differences.

NOTE 11- APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2013 and 2012 

consisted of the following: 

 2013 2012

Direct Obligations, Category A $ 22,987,460 $24,084,024

Reimbursable Obligations, Category A 20,410 54,660

Total Obligations Incurred $ 23,007,870 $24,138,684

Category A apportionments distribute budgetary resources by fiscal quarters. 
20 

NOTE 12- UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the fiscal years ended September 30, 2013 and 2012, budge tary resources obligated for 

undelivered orders amounted to $1,234,929 and $1,473,988, respectively. 

NOTE 13- CUSTODIAL ACTIVITY

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

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

reported as custodial activity on t he “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 part of the custodial activity is application for licenses issued to qualified 

Ocean Transportation Intermediaries (OTI’s) in the U.S., Commission reviews, petitions, status 

changes, and special permission fees.

Custodial receipts are broken out in the following general receipt funds: 

 2013 2012

Fines, Penalties, and Forfeitures $ 3,102,173 $ 665,000

General Fund Proprietary Receipts (user fees) 219,812 341,673

Refund of User Fees

Total Custodial Collections

(2,419) (375)

 $ 3,319,566 $ 1,006,298

NOTE 14- 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. 

 2013 2012

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations Incurred $ 23,007,870 $ 24,138,684

Spending Authority from Offsetting Collections and Recoveries (3,068,725) 428,224

Obligations Net of Offsetting Collections and Recoveries 19,939,145 24,566,908

Other Resources

Imputed Financing from Costs Absorbed by Others 1,418,039 1,458,582

Net Other Resources Used to Finance Activities 1,418,039 1,458,582

Total Resources Used to Finance Activities 21,357,184 26,025,490

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

 Operations 3,002,168 (1,009,016)

Total Resources Used to Finance the Net Cost of Operations 24,359,352 25,016,474

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

 Generate Resources in the Current Period 156,858 148,572

Net Cost of Operations $ 24,516,210 $ 25,165,046
21 

NOTE 15- SUBSEQUENT EVENTS

In preparing these financial statements, management has evaluated events and transactions for 

potential recognition or disclosure through December 2, 2013, which is the date the financial 

statements are available to be issued.
 

22 

 

APPENDIX A - 

FEDERAL MARITIME COMMISSION COMMENTS ON

DRAFT AUDIT REPORT
Federal Maritime 

Commission

800 North Capitol Street, N.W. 

Washington, D.C. 20573-0001 

Phone: (202) 523-5800 

Fax: (202) 523-3646 

E-mail: omd@fmc.gov

Office of the 

Managing Director

December 12, 2013 

Regis & Associates, PC

1400 Eye Street, NW, Suite 425 

Washington, DC 20005 

Dear Mr. Regis:

I have reviewed the financial statements audit report provided to me for the fiscal year ended 

September 30, 2013. I am pleased to note that there were no weaknesses or reportable findings, 

and that this audit is the tenth consecutive unqualified opinion that the Federal Maritime 

Commission has received. 

Sincerely,

/Vern W. Hill/ 

Chief Financial Officer