Office      of Inspector General
 

Independent Auditors’ Report of the
 

FMC’s FY 2015 Financial Statements
 

A16-01
 

November 2015 

FEDERAL MARITIME COMMISSION
 
        

  

     

 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION
 

Washington, DC 20573
 

November 10, 2015 

Office of Inspector General

Dear Chairman Cordero and Commissioners: 

I am pleased to provide the attached audit report required by the Accountability for Tax 

Dollars Act of 2002 (ATDA), which presents an unmodified (clean) opinion on the Federal 

Maritime Commission’s (FMC) fiscal year (FY) 2015 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 unmodified 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, 2015; 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 FMC, Regis found: the financial statements were fairly presented, in 

all material respects, in conformity with U.S. Generally Accepted Accounting Principles; there 

were no material weaknesses or significant deficiencies in internal control over financial 

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

In connection with the OIG’s contract, the OIG reviewed Regis & Associates’ report and 

related documentation and inquired of its representatives. Our review, as differentiated from an 

audit in accordance with U.S. Generally Accepted Government Auditing Standards, was not 

intended to enable the OIG to express, and we do not express, opinions on FMC's financial 

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

Associates is responsible for the attached auditors' report dated November 4, 2015 and the 

conclusions expressed in the report. However, our review disclosed no instances where Regis & 

Associates did not comply, in all material respects, with Generally Accepted Government 

Auditing Standards. 
 

 

 

The OIG would like to thank FMC staff; especially the Office of Budget and Finance, 

for their assistance in helping Regis & Associates and the OIG meet the audit objectives. 

Respectfully submitted, 

Jon Hatfield 

Inspector General 

Attachment 

cc: Office of the Managing Director 

Office of the General Counsel 

Office of Budget and Finance 
 

 

REPORT ON THE 

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION 

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2015 and 2014 

MANAGEMENT CONSULTANTS &

 CERTIFIED PUBLIC ACCOUNTANTS
 
REPORT ON THE 

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION 

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2015 and 2014 

TABLE OF CONTENTS
	

Independent Auditors' Report .......................................................................................... 1-3 

Balance Sheet.......................................................................................................................4 

Statement of Net Cost ..........................................................................................................5 

Statement of Changes in Net Position .................................................................................6 

Statement of Budgetary Resources ......................................................................................7 

Statement of Custodial Activity ...........................................................................................8 

Notes to Financial Statements........................................................................................ 9-21 

Agency Comments on Draft Audit Report (Appendix A) .................................................22 
 

 

 

 

 

 

 

MANAGEMENT CONSULTANTS & 

CERTIFIED PUBLIC ACCOUNTANTS 

INDEPENDENT AUDITORS' REPORT
	

The Honorable Mario Cordero, 

Chairman 

Federal Maritime Commission 

Washington, DC 

Report on the Financial Statements 

We have audited the accompanying Financial Statement Report of the Federal Maritime 

Commission, which comprises the Balance Sheet as of September 30, 2015 and 2014, and the related 

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

Statement of Custodial Activity, and the related notes to the financial statements as of September 

30, 2015 and 2014. 

Management's Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements, in 

accordance with U.S. Generally Accepted Accounting Principles. This includes the design, 

implementation, and maintenance of internal control, relevant to the preparation and fair presentation 

of the financial statements that are free from material misstatement, whether due to fraud or error. 

Auditor's Responsibility 

Our responsibility is to express an opinion on these financial statements, 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 U.S. Government Auditing 

Standards, issued by the Comptroller General of the United States; and Office of Management and 

Budget’s (OMB) Bulletin No. 15-02, Audit Requirements for Federal Financial Statements. Those 

standards and OMB Bulletin No. 15-02 require that we plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free from material misstatement. An audit 

involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

financial statements. The procedures selected depend on the auditor's judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal control relevant to the agency's 

preparation and fair presentation of the financial statements, in order to design audit procedures that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the agency's internal control. Accordingly, we express no such opinion. An audit also 

includes evaluating the appropriateness of accounting policies used, and the reasonableness of 

significant estimates made by management, as well as evaluating the overall presentation of the 

1 

1420 K Street, NW, Suite 910, Washington, DC 20005 Tel 202-296-7101 Fax 202-296-7284 
 

 

 

 

 

 

 

financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate 

to provide a basis for our opinion. 

Opinion 

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

financial position of the Federal Maritime Commission as of September 30, 2015 and 2014; and its 

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

ended, in accordance with U.S. Generally Accepted Accounting Principles. 

Other Accompanying Information 

Required Supplementary Information 

U.S. Generally Accepted Accounting Principles require that the information in the other accompanying 

information 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, which considers 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 required supplementary information, in accordance with auditing standards 

generally accepted in the United States of America, which consisted of inquiries of management about 

the methods of preparing the information, and comparing the information for consistency with 

management's responses to our inquiries, the financial statements, and other knowledge we obtained 

during our audits of the 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. 

Restriction on Use of the Report on the Financial Statements 

This report is intended solely for the information and use of the management of the Federal Maritime 

Commission, the U.S. Department of the Treasury, OMB, and the U.S. Government Accountability 

Office, in connection with the preparation and audit of the Financial Report of the U.S. Government; 

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

Internal Control over Financial Reporting Specific to the Financial Statements 

In planning and performing our audits of the financial statements as of, and for the years ended 

September 30, 2015 and 2014, we also considered Federal Maritime Commission's internal control 

over the financial reporting (internal control) to determine the audit procedures that are appropriate in 

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

the purpose of expressing an opinion of the effectiveness of Federal Maritime Commission's internal 

control. Accordingly, we do not express an opinion on the effectiveness of 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. We did not identify any deficiencies in internal control that we consider to 

be material weaknesses or significant deficiencies. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in their normal course of performing their assigned functions, to prevent, 

2 
 

 

 

 

 

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 entity's financial statements will not be prevented, or detected and corrected, on a 

timely basis. 

A significant deficiency is a deficiency, or a combination of deficiencies in internal control, that is 

less severe than a material weakness, yet important enough to merit the attention by those charged 

with governance. There were no deficiencies in the accompanying financial statements that are 

considered to be significant deficiencies. 

Compliance and Other Matters Specific to the Financial Statements 

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

statements are free from material misstatement, we also performed tests of its compliance with certain 

provisions of laws, regulations, contracts, and agreements. However, 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 disclosed no instances of non-compliance with laws, regulations, 

contracts, and agreements; or other matters that are required to be reported herein, under Government 

Auditing Standards and OMB Bulletin No. 15-02. 

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. 

Purpose of the Other Reporting Required by Government Auditing Standards 

The purpose of the communication provided in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance, and 

the results of that testing, and not to provide an opinion on the effectiveness of the agency's internal 

control or on compliance. This communication is an integral part of an audit performed in accordance 

with U.S. Generally Accepted Government Auditing Standards in considering internal control and 

compliance with provisions of laws, regulations, contracts, and agreements that have a material effect 

on the financial statements. Accordingly, this communication is not suitable for any other purpose. 

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 

November 4, 2015 

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FEDERAL MARITIME COMMISSION 

BALANCE SHEET 

AS OF SEPTEMBER 30, 2015 AND 2014 

(IN DOLLARS) 

2015 2014 

Assets: 

Intragovernmental: 

Fund Balance With Treasury (Note 2) $ 4,397,659 $ 4,105,128 

Accounts Receivable (Note 3) 14,540 -

 Total Intragovernmental 4,412,199 4,105,128

 Accounts Receivable, Net (Note 3) 5,447 1,520 

Property, Equipment, and Software, Net (Note 4) 408,312 404,706 

Total Assets $ 4,825,958 $ 4,511,354 

Liabilities: 

Intragovernmental: 

Accounts Payable $ 65,788 $ 104,117 

Other ( Note 6) 117,760 86,032 

Total Intragovernmental 183,548 $ 190,149

 Accounts Payable 471,552 425,648 

Federal Employee and Veterans' Benefits (Note 5) - 787 

Other (Note 6) 1,788,591 1,485,061 

Total Liabilities (Note 5) $ 2,443,691 $ 2,101,645 

Net Position: 

Unexpended Appropriations - Other Funds $ 3,167,730 $ 3,129,440 

Cumulative Results of Operations - Other Funds (785,463) (719,731) 

Total Net Position $ 2,382,267 $ 2,409,709 

Total Liabilities and Net Position $ 4,825,958 $ 4,511,354 

The accompanying notes are an integral part of these financial statements 

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FEDERAL MARITIME COMMISSION 

STATEMENT OF NET COST 

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 

(IN DOLLARS) 

2015 2014 

Program Costs: 

Operational and Administrative 

Gross Costs $ 18,323,598 $ 16,120,903 

Less: Earned Revenue (40,304) -

Net Program Costs $ 18,283,294 $ 16,120,903 

Formal Proceedings 

Gross Costs $ 7,803,458 $ 7,505,802 

Less: Earned Revenue (21,864) (29,030) 

 Net Program Costs $ 7,781,594 $ 7,476,772 

Office of Inspector General 

Gross Costs $ 450,246 $ 314,541 

Net Program Costs $ 450,246 $ 314,541 

Office of Equal Employment Opportunity 

Gross Costs $ 153,307 $ 193,139 

Net Program Costs $ 153,307 $ 193,139 

Total Other Program Costs: $ 8,407,011 $ 7,984,452 

Net Cost of Operations (Note 9) $ 26,668,441 $ 24,105,355 

The accompanying notes are an integral part of these financial statements 

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FEDERAL MARITIME COMMISSION 

STATEMENT OF CHANGES IN NET POSITION 

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 

(IN DOLLARS) 

2015 2014 

Cumulative Results of Operations: 

Beginning Balances $ (719,731) $ (910,588) 

Budgetary Financing Sources:

 Appropriations Used 25,464,081 22,988,907 

Other Financing Sources (Non-Exchange): 

 Imputed Financing Sources (Note 10) 1,138,628 1,307,305 

 Total Financing Sources 26,602,709 24,296,212

 Net Cost of Operations (26,668,441) (24,105,355)

 Net Change (65,732) 190,857 

Cumulative Results of Operations $ (785,463) $ (719,731) 

Unexpended Appropriations: 

Beginning Balances $ 3,129,440 $ 1,820,115 

Budgetary Financing Sources:

 Appropriations Received 25,660,000 24,669,000

 Other Adjustments (157,629) (370,768) 

Appropriations Used (25,464,081) (22,988,907)

 Total Budgetary Financing Sources 38,290 1,309,325

 Total Unexpended Appropriations $ 3,167,730 $ 3,129,440 

Net Position $ 2,382,267 $ 2,409,709 

The accompanying notes are an integral part of these financial statements 

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FEDERAL MARITIME COMMISSION
	

STATEMENT OF BUDGETARY RESOURCES 

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 

(IN DOLLARS) 

2015 2014 

Budgetary Resources: 

Unobligated Balance Brought Forward, October 1 $ 387,204 $ 585,311 

Recoveries of Prior Year Unpaid Obligations 518,708 268,870 

Other changes in unobligated balance (157,629) (370,768)

 Unobligated balance from prior year budget authority, net 748,283 483,413 

 Appropriations 25,660,000 24,669,000 

 Spending authority from offsetting collections 62,249 29,117 

Total Budgetary Resources $ 26,470,532 $ 25,181,530 

Status of Budgetary Resources: 

 Obligations Incurred (Note 12) $ 26,168,073 $ 24,794,326 

 Unobligated balance, end of year: 

Apportioned (Note 2) 17,625 18,211 

Unapportioned (Note 2) 284,834 368,993 

 Total unobligated balance, end of year 302,459 387,204 

Total Budgetary Resources $ 26,470,532 $ 25,181,530 

Change in Obligated Balance 

Unpaid Obligations: 

 Unpaid Obligations, Brought Forward, October 1 $ 3,717,924 $ 2,035,436

 Obligations Incurred (Note 12) 26,168,073 24,794,326 

Outlays (gross) (25,257,549) (22,842,968)

 Recoveries of Prior Year Unpaid Obligations (518,708) (268,870) 

Unpaid Obligations, End of Year (Gross) $ 4,109,740 $ 3,717,924 

Uncollected payments 

Change in Uncollected payments, Federal Sources (14,540) -

Uncollected Customer Payments, Federal Sources, End of Year (14,540) -

Obligated Balance, End of Year $ 4,095,200 $ 3,717,924 

Budget Authority and Outlays, Net: 

Budget authority, gross $ 25,722,249 $ 24,698,117

 Actual offsetting collections (47,709) (29,117) 

Change in uncollected Payments, Federal Sources (14,540) -

 Budget Authority, net (total) $ 25,660,000 $ 24,669,000 

Outlays, gross $ 25,257,549 $ 22,842,968 

Actual offsetting collections (47,709) (29,117) 

Outlays, net (total) 25,209,840 22,813,851 

Distributed Offsetting Receipts (248,451) (220,316) 

Agency Outlays, net $ 24,961,389 $ 22,593,535 

The accompanying notes are an integral part of these financial statements 

7 
 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION
	

STATEMENT OF CUSTODIAL ACTIVITY 

AS OF SEPTEMBER 30, 2015 AND 2014 

(IN DOLLARS) 

2015 2014 

Revenue Activity: 

Sources of Cash Collections: 

Miscellaneous $ 2,299,802 $ 3,185,724 

Total Cash Collections (Note 14) 2,299,802 3,185,724 

Accrual Adjustments (643) (1,247) 

Total Custodial Revenue 2,299,159 3,184,477 

Disposition of Collections: 

Transferred to Others (by Recipient) 2,300,035 3,185,491 

Increase/(Decrease) in Amounts Yet to be Transferred 410 1,480 

 Retained by the Reporting Entity (1,286) (2,494) 

Net Custodial Activity $ - $ -

The accompanying notes are an integral part of these financial statements 

8 
 

 

 

FEDERAL MARITIME COMMISSION 

NOTES TO THE FINANCIAL STATEMENTS 

SEPTEMBER 30, 2015
	

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	

A. Reporting Entity 

The Federal Maritime Commission 

(“FMC” or “the Commission”) 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 

Commission are the Shipping Act of 

1984, as amended by the Ocean Shipping 

Reform Act 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 Commission: monitors the activities 

of ocean common carriers, marine 

terminal operators (MTOs), agreements 

among ocean common carriers and/or 

MTOs, ports and ocean transportation 

intermediaries (non- vessel-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 

Act; monitors the laws and practices of 

foreign governments, which could have a 

discriminatory or otherwise adverse 

impact on shipping conditions in U.S. 

trades, and imposes remedial action, as 

appropriate, pursuant to section 19 of the 

1920 Act or FSPA; enforces special 

regulatory requirements applicable to 

carriers owned or controlled by foreign 

governments; processes and reviews 

agreements, service 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 

Commission also issues licenses to qualified 

ocean transportation intermediaries (OTIs) 

in the U.S., ensures that all OTIs are bonded 

or maintain other evidence of financial 

responsibility, and ensures that passenger 

vessel operators (PVOs) demonstrate 

adequate financial responsibility in case of 

nonperformance 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. 

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The FMC makes custodial collections and otherwise, all amounts are presented in 

holds custodial receivables that are non- dollars. 

entity assets and 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, and 

the Government Management Reform Act 

of 1994. 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 

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. 

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 

10
	
 

 

 

purchases. Property, equipment, and 

software acquisitions that do not 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. 

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist o f 

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. Non-vested 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)-

11
	
 

 

 

 

 

covered employees, effective at 50% for 

the 1st quarter of FY 2014, and 100% 

thereafter. 

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 (1) the net present value of 

estimated future payments calculated by 

the DOL, and (2) the unreimbursed cost 

paid by DOL for compensation to 

recipients under the FECA. 

K. Retirement Plans 

FMC employees participate in either the 

CSRS or the FERS. The employees who 

p a r t i c i p a t e in CSRS are beneficiaries 

of FMC matching contribution, equal to 

seven percent 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 through 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 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 one percent of pay, and 

FMC matches any employee contribution up 

to an additional four percent 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 recognized 

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, is 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 postretirement benefit to current employees. The 

FMC recognizes a current cost for these and 

12
	
 

 

 

 

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 

G enerally 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 c o s t s that are paid 

by other entities. FMC recognized 

imputed costs and financing sources in 

fiscal years 2015 and 2014 to the extent 

directed by accounting standards. 

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 t h e 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. Reclassification 

Certain fiscal year 2014 balances have been 

reclassified, re-titled, or combined with other 

financial statement line items for consistency 

with the current year presentation. 

13
	
 

 

 

 

 

 

 

 

 

 

 

 

NOTE 2- FUND BALANCE WITH TREASURY 

Fund Balance With Treasury account balances as of September 30, 2015 and 2014 were as 

follows: 

No discrepancies exist between the Fund Balance reflected on the Balance Sheet, and the balances 

in the Treasury accounts. 

2015 2014 

Fund Balances: 

Appropriated Funds $ 4,397,659 $ 4,105,128 

Total $ 4,397,659 $ 4,105,128 

Status of Fund Balance with Treasury:

 Unobligated Balance

 Available $ 17,625 $ 18,211

 Unavailable 284,834 368,993

 Obligated Balance Not Yet Disbursed 4,095,200 3,717,924 

Total $ 4,397,659 $ 4,105,128 

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. 

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 13). 

14 
 

 

 

 

 

 

 

NOTE 3- ACCOUNTS RECEIVABLE 

Accounts receivable balances for as of September 30, 2015 and 2014, were as follows: 

2015 2014 

Intragovernmental 

 Accounts Receivable 

Total Intragovernmental Accounts Receiva

$ 14,540 

ble $ 14,540 

$ 

$ 

-

-

2015 2014 

With the Public 

 Miscellaneous Accounts Receivable 

Interest Receivable 

 Penalties and Fines Receivable 

Total Public Accounts Receivable 

$ 5,141 

21 

285 

$ 5,447 

$ 

$ 

1,389 

1,520 

-

131 

Total Accounts Receivable $ 19,987 $ 1,520 

The accounts receivable is primarily made up of services provided to other Intragovernmental 

agencies. Historical experience has indicated that the majority of the receivables are collectible. 

There are no material uncollectible accounts as of September 30, 2015 and 2014. 

NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE 

The Schedule of Property, Equipment, and Software as of September 30, 2015 is as follows: 

Accumulated 

Acquisition Amortization/ Net Book 

Major Class Cost Depreciation Value 

Leasehold Improvements $ 225,000 $ 225,000 $ -

Furniture & Equipment 502,537 324,249 178,288 

 Software-in-Development 230,024 - 230,024 

Total $ 957,561 $ 549,249 $ 408,312 

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NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE Cont’d 

Schedule of Property, Equipment, and Software as of September 30, 2014 is as follows: 

Accumulated 

Acquisition Amortization/ Net Book 

Major Class Cost Depreciation Value 

Leasehold Improvements 

Furniture & Equipment

$ 225,000 

341,800 

$ 225,000 

262,401

$ -

79,399 

 Software-in-Development 

Total 

325,307 

$ 892,107 

-

$ 487,401 $ 

325,307 

404,706 

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

The liabilities of FMC as of September 30, 2015 and 2014 include 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. 

2015 2014 

Unfunded Leave $ 1,197,058 $ 1,123,416 

Actuarial FECA - 787 

Custodial Liabilities 2,163 1,753 

Total Liabilities Not Covered by Budgetary Resources $ 1,199,221 $ 1,125,956 

Total Liabilities Covered by Budgetary Resources 1,244,470 975,689 

Total Liabilities $ 2,443,691 $ 2,101,645 

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. 

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NOTE 6- OTHER LIABILITIES 

Other liabilities account balances as of September 30, 2015 were as follows: 

Non 

Current Current Total 

Intragovernmental

 Payroll Taxes Payable $ 115,597 $ - $ 115,597 

 Custodial Liabilities 2,163 - 2,163 

Total Intragovernmental Other Liabilities $ 117,760 $ - $ 117,760 7
	

With the Public

 Payroll Taxes Payable $ 15,136 $ - $ 15,136 

 Accrued Funded Payroll and Leave 576,397 - 576,397 

 Unfunded Leave 1,197,058 - 1,197,058 

Total Public Other Liabilities $ 1,788,591 $ - $ 1,788,591 

Other liabilities account balances as of September 30, 2014 were as follows: 

Non 

Current Current Total 

Intragovernmental

 Payroll Taxes Payable $ 84,279 $ - $ 84,279 

 Custodial Liabilities 1,753 - 1,753 

Total Intragovernmental Other Liabilities $ 86,032 $ - $ 86,032 

With the Public

 Payroll Taxes Payable $ 12,022 $ - $ 12,022 

 Accrued Funded Payroll and Leave 349,623 - 349,623 

 Unfunded Leave 1,123,416 - 1,123,416 

Total Public Other Liabilities $ 1,485,061 $ - $ 1,485,061 

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NOTE 7- 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 2015 and 2014 were $3,277,725 and $3,433,323, respectively. The lease locations and 

terms are listed below: 

Location Term Lease Expiration Date 

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 

Washington, DC 10 years 10/31/2022 

Iselin, New Jersey 10 years 03/15/2024 

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 

2016 $ 3,189,633
	

2017 3,221,574
	

2018 3,419,625
	

2019 3,454,859
	

2020 3,469,921
	

Thereafter 7,330,851
	

Total Future Minimum Payments $ 24,086,463
	

NOTE 8- 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. The FMC has knowledge of one 

lawsuit/investigation from FY 2014 where the amount of potential loss exceeds $48,000. The FMC 

has knowledge of one lawsuit/investigation from FY 2015 where the amount of potential loss 

exceeds $48,000. The Commission will be vigorously contesting both cases. 

18 
 

 

 

 

NOTE 9- 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: 

2015 2014 

Operational and Administrative 

Intragovernmental Costs 

 Public Costs 

Total Program Costs 

Less: Intragovernmental Earned Revenue 

Net Program Costs 

$ 3,727,051 

14,596,547 

18,323,598 

(40,304) 

18,283,294 

$ 3,793,654

12,327,249 

16,120,903 

-

16,120,903 

Formal Proceedings 

Intragovernmental Costs 

Public Costs 

1,096,851 

6,706,607 

1,021,862 

6,483,940 

Total Program Costs 7,803,458 7,505,802 

Less: Intragovernmental Earned Revenue 

Net Program Costs 

(21,864) 

7,781,594 

(29,030) 

7,476,772 

Office of Inspector General 

Intragovernmental Costs 

Public Costs 

Total Program Costs 

Net Program Costs 

89,391 

360,855 

450,246 

450,246 

246,955 

67,586 

314,541 

314,541 

Office of Equal Employment Opportunity 

Intragovernmental Costs 

Public Costs 

Total Program Costs 

Net Program Costs 

20,242 

133,065 

153,307 

153,307 

20,323 

172,816 

193,139 

193,139 

Total Intragovernmental Costs 

Total Public Costs 

Total Costs 

Less: Total Intragovernmental Earned Revenue 

Net Cost of Operations 

4,933,535 

21,797,074 

26,730,609 

(62,168) 

$ 26,668,441 $ 

5,082,793 

19,051,592 

24,134,385 

(29,030) 

24,105,355 

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NOTE 10- 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, 2015 and 2014, imputed financing was as follows: 

2015 2014 

Office of Personnel Management $ 1,138,628 $ 1,307,305

 Total Imputed Financing Sources $ 1,138,628 $ 1,307,305 

NOTE 11- BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT 

The President’s budget that will include fiscal year 2015 actual budgetary execution information has 

not yet been published. The President’s budget is scheduled for publication in February 2016, and 

will be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2016 Budget of the 

United States Government, with the "Actual" column completed for 2014, has been reconciled to 

the Statement of Budgetary Resources, and there were no material differences. 

NOTE 12- APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

Obligations incurred and reported in the Statement of Budgetary Resources in 2015 and 2014 

consisted of the following: 

2015 2014 

Direct Obligations, Category A $ 26,105,905 $ 24,765,296 

Reimbursable Obligations, Category A 62,168 29,030 

Total Obligations Incurred $ 26,168,073 $ 24,794,326 

Category A apportionments distribute budgetary resources by fiscal quarters. 

NOTE 13- UNDELIVERED ORDERS AT THE END OF THE PERIOD 

For the fiscal years ended September 30, 2015 and 2014, budgetary resources obligated for 

undelivered orders amounted to $ 2,865,271and $2,742,237, respectively. 

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NOTE 14- 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 the “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 for the application on licenses issued to qualified Ocean 

Transportation Intermediaries (OTIs) in the U.S., commission reviews, petitions, status changes, 

and special permission fees. 

Custodial receipts are broken out in the general receipt funds: 

2015 2014 

 Fines, Penalties, and Forfeitures 

 General Fund Proprietary Receipts (user f

 Refund of user fees 

 Total Custodial Collections 

$ 2,052,514 

ees) 253,476 

(6,188) 

$ 2,299,802 

$ 

$ 

2,968,000 

220,549 

(2,825) 

3,185,724 

NOTE 15- 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. 

 2015 2014 

Resources Used to Finance Activities 

Budgetary Resources Obligated 

Obligations Incurred $ 26,168,073 $ 24,794,326

Spending Authority from Offsetting Collections and Recoveries (580,957) (297,987) 

Offsetting Receipts (248,451) (220,316) 

Net Obligations 25,338,665 24,276,023 

Other Resources 

Imputed Financing from Costs Absorbed by Others 1,138,628 1,307,305 

Net Other Resources Used to Finance Activities 1,138,628 1,307,305 

Total Resources Used to Finance Activities 26,477,293 25,583,328

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

 Operations 42,414 (1,560,406) 

Total Resources Used to Finance the Net Cost of Operations 26,519,707 24,022,922

 Components of Net Cost of Operations that will not Require or 

Generate Resources in the Current Period 148,734 82,433 

Net Cost of Operations $ 26,668,441 $ 24,105,355 

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APPENDIX A -

FEDERAL MARITIME COMMISSION COMMENTS ON 

DRAFT AUDIT REPORT
	

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