Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

April 1, 2015 – September 30, 2015 

FEDERAL MARITIME COMMISSION
 
 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Washington, DC 20573 

November 24, 2015 

Office of Inspector General 

Dear Chairman Cordero and Commissioners: 

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

Act of 1978, as amended. The report summarizes the activities of the Office of Inspector General 

(OIG) for the period April 1, 2015 to September 30, 2015. 

During this reporting period, the OIG was pleased to welcome two new, temporary staff. 

Ms. Cynthia Poteat, a Senior Auditor on detail from the Environmental Protection Agency OIG, 

who joined the FMC OIG in late May 2015 for a six-month reimbursable detail. In addition, Mr. 

Trey Levy, a law student from American University, worked as a summer legal intern for the OIG. 

The contributions of Ms. Poteat and Mr. Levy were particularly important during the period when 

one of the office’s two positions remained vacant. 

The OIG completed an Audit of Expenditures for Furnishing or Redecorating 

Commissioners’ Offices, and had a financial audit and information security evaluation in progress 

at the end of the reporting period. These assignments are all discussed in more detail in the 

attached report. The OIG continues to appreciate the cooperation and courtesies provided by the 

FMC’s leadership and staff. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

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Table of Contents

Transmittal Letter
 

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

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

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

OFFICE OF INSPECTOR GENERAL ACTIVITIES ..........................................................................................4
 

Completed Audit....................................................................................................................................................... 4
 

Open Audits and Evaluation...................................................................................................................................... 5
 

Hotline and Investigations........................................................................................................................................ 6
 

OTHER ACTIVITIES .................................................................................................................................6
 

Peer Review .............................................................................................................................................................. 6
 

Memorandum of Understanding.............................................................................................................................. 7
 

Review of Legislation ................................................................................................................................................ 7
 

Council of Inspectors General on Integrity and Efficiency (CIGIE) Activities............................................................. 7
 

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

TABLE I ‐ Summary of Reports with Corrective Actions Outstanding for More than 6 Months............10
 

TABLE II ‐ Listing of 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
 
	 	

 

 

 

 

	 	

 

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 six month 

reporting period April 1, 2015 through September 30, 2015. The most significant activities of the 

OIG during the second half of fiscal year (FY) 2015 are summarized below and additional details can 

be found in subsequent sections of this report. 

During part of this reporting period, the OIG’s one auditor position was vacant, this position 

represents one-half of the OIG’s staff size. However, the OIG entered into a six-month agreement 

with the Environmental Protection Agency (EPA) OIG to have a Senior Auditor detailed to this office. 

In addition, the OIG also started a new OIG intern program and had one legal intern work for the OIG 

during the summer of 2015. 

During this reporting period, the OIG completed an Audit of Expenditures for Furnishing or 

Redecorating Commissioners’ Offices. In addition, the OIG had two audits and one evaluation open 

during the period. Specifically, the annual financial statement audit (A16-01) and evaluation of the 

FMC’s compliance with the Federal Information Security Management Act (A16-02) are expected to 

be completed in November 2015, and an audit of the FMC’s physical security operations is on-hold 

pending the staffing of the OIG’s vacant auditor position. 

During the period, the OIG received two new hotline complaints and closed seven hotline 

complaints. The OIG also closed one administrative investigation. There were no new investigations 

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

five hotline complaints were pending and there were no investigations open. 

FEDERAL MARITIME COMMISSION

The FMC is an independent Federal 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. 

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

U.S. 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. These Area Representatives 

serve the major ports and transportation centers within their respective geographic areas, and provide 

information, liaison and investigatory services on behalf of the FMC. 

Pictured: Port of Seattle, Washington.

Port of Seattle by Don Wilson. 

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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 reports to the 

FMC Commissioners and Congress. To aid the FMC in accomplishing its mission, the OIG is 

provided two full-time positions, the Inspector General and an auditor. The OIG has a memorandum 

of understanding (MOU) in place 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. 

During this semiannual period, the 

OIG was pleased to welcome two new, 

temporary staff. Ms. Cynthia Poteat, a Senior 

Auditor on detail from the Environmental 

Protection Agency OIG, joined the FMC OIG 

in late May 2015 for a six-month 

reimbursable detail. In addition, Mr. Trey 

Levy, a law student from American 

University, worked as a summer legal intern 

for the OIG. 

Ms. Poteat has over 30 years of 

Federal government experience and is 

currently a Senior Auditor with the 

Environmental Protection Agency, OIG 

Financial Audit Staff. Last November 2014, 

Ms. Poteat helped complete the audit of the 

EPA’s 2014 financial statements. Ms. Poteat 

is a mentor and a coach to the EPA OIG’s 

junior audit staff and has also completed EPA 

audits in the areas of property accountability, 

unliquidated obligations and pesticide reregistration. 

Photo by FMC’s David W. Story. 

Mr. Levy is a second-year law (2L) 

student at American University's Washington 

College of Law with an interest in environmental 

issues concerning the ocean. Last year he served 

on the Student Bar Association's Student Senate 

and was re-elected to continue as a member of the 

Senate for his 2L year. Mr. Levy received his 

Bachelor of Arts in Political Science and History 

from Oberlin College in 2014, where he also 

served as class president. During the summer 

2015, Mr. Levy was responsible for assisting the 

OIG on hotline complaints and investigative 

work. 

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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

Completed Audit

Audit of Expenditures for Furnishing or Redecorating Commissioners’ Offices. The 

OIG completed an audit of expenditures for furnishing, redecorating or making improvements to 

the Commissioners’ offices of the FMC. The OIG decided to perform this audit, after the FMC 

OIG received a request on May 9, 2012, from the U.S. House of Representatives Committee on 

Oversight and Government Reform to provide a complete account for all purchases made for the 

then-Chairman. The OIG commenced this audit on April 25, 2013, but due to the separation of 

the OIG’s auditor-in-charge in December 2013, the audit was put on hold until June 2015, after a 

new auditor joined the OIG. To ensure Presidential-appointees do not expend taxpayers’ dollars 

for lavish office suites, laws have been in place to limit amounts to be spent on office redecorating 

and improvements to a maximum of $5,000, per Commissioner and office suite. 

The OIG’s audit determined that the $5,000 statutory limit to furnish or redecorate, or to 

purchase furniture or make improvements to a Presidential-appointee’s offices was exceeded for 

the former Chairman; this former Chairman served as FMC Chairman from September 2009 to 

March 2013. Specifically, the OIG found that for fiscal years 2009 – 2011, $12,084 was spent for 

furnishings and redecorating of this former Chairman’s office suite. 

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The OIG concluded the agency lacks a policy to ensure the $5,000 limit is not exceeded 

for each Commissioner. Specifically, there is no agency policy to provide the Commissioners and 

the responsible agency officials with guidance on the type of expenditures that are applied to the 

$5,000 limit, and to stipulate that the limit applies to the suite of offices assigned or under the 

control of the Commissioners. Further, the OIG found the agency has not maintained adequate 

documentation on Commissioners’ expenditures for furnishing, redecorating and making 

improvements to Commissioners’ offices. 

The OIG’s audit report contained five recommendations, and the agency concurred with 

all of the OIG’s recommendations. The agency recognizes the need for improvements to the 

Commission’s recordkeeping processes and implementation of written policy guidance on the 

Commissioners’ office suite expenditures. The OIG believes the agency’s planned corrective 

actions demonstrate a commitment to address the weaknesses identified during this audit. 

Open Audits and Evaluation

Independent Auditors’ Report of FMC’s FY 2015 Financial Statements. The audit objectives 

are to opine on whether the FMC’s FY 2015 financial statements follow U.S. Generally Accepted 

Accounting Principles and present fairly the financial position of the agency. The audit will also 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, 2015 and 2014, and the related 

Statements of Net Cost, Statements of Changes in Net Position, Statements of Budgetary Resources 

and Statements of Custodial Activity. 

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

Act FY 2015. 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 evaluation 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. 

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Audit of FMC’s Physical Security – Datawatch. 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 has filled the vacant 

auditor position. 

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 received two new hotline complaints and closed seven hotline 

complaints. The OIG also closed one administrative investigation. There were no new 

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

reporting period, five hotline complaints were pending and there were no investigations open. 

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 (P.L. 111-203), 

requires Federal OIGs to include in their semiannual reports to Congress an appendix containing 

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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 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, waste, and 

abuse. 

Council of 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. 

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 

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operations. Specifically, the Inspector General (IG) is a member of CIGIE, participates in the 

monthly CIGIE meetings and periodically assists CIGIE on special projects. 

During this reporting period, the IG became a member of the CIGIE’s Audit Committee 

and Investigations Committees. 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 mission 

of the Investigations Committee is to advise the IG community on issues involving investigations, 

investigative personnel, and establishing investigative guidelines. Both the Audit and 

Investigations Committees generally meet on a bi-monthly basis, or more frequently as necessary. 

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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 reports by subject matter 10 

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

Section 5(a)(8) Reports with questioned costs 10 

Section 5(a)(9) Recommendations that funds be put to better use None 

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

period for which no management decision was made 

by the end of the reporting period 

11 

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)(15) Peer review activity on FMC OIG 13, App. A 

Section 5(a)(16) Peer review activity by FMC OIG on another OIG None 

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

than 6 Months

Recommendations 

Report Title Report 

Number 

Issue 

Date Number Open Closed 

Workplace Evaluation 

Report 

A15-04 03/10/15 6 3 3 

FY 2014 Implementation 

of FISMA 

A15-02 11/14/14 8 3 5 

Review of FMC’s User 

Fee Calculations 

OR10-03 5/27/10 1 1 0 

TABLE II ‐		Listing of Reports Issued

Report Title Report Issue Questioned Unsupported Funds Put to 

Number Date Costs Costs Better Use 

Audit of Expenditures for A15-05 09/29/15 $7,084 $0 $0 

Furnishing or Redecorating 

Commissioners’ Offices 

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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. 

1 $7,084 $0 

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0 

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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 

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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. 

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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.