Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

 

October 1, 2019 – March 31, 2020 

FEDERAL MARITIME COMMISSION 
FEDERAL MARITIME COMMISSION

Washington, DC 20573

April 29, 2020 

Office of Inspector General

Dear Chairman Khouri and Commissioners Dye, Maffei, Sola and Bentzel: 

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

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

Commission (FMC) Office of Inspector General (OIG) for the period October 1, 2019 to March 

31, 2020. 

During this reporting period, the OIG completed three audits. Specifically, the OIG 

completed an audit of the Digital Accountability and Transparency Act of 2014 (A20-01), the FY 

2019 annual financial statement audit (A20-02), and audit of the FMC’s compliance with the 

Federal Information Security Management Act (A20-03). All of these audits are discussed in more 

detail in this report. 

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

leadership and staff. 

 Respectfully submitted, 

 Jon Hatfield 

 Inspector General

Enclosure 
Table of Contents

Transmittal Letter

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

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

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

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

Completed Audits ..................................................................................................................................................... 3

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

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

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

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

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS............................................................. 7

TABLE I - Summary of Reports with Corrective Actions Outstanding for More than 6 Months.................. 8

TABLE II - Listing of Reports Issued........................................................................................................... 8

TABLE III - Reports with Questioned Costs ............................................................................................... 9

TABLE IV - Recommendations that Funds be Put to Better Use ..............................................................10

Appendix A - Peer Review Activity .........................................................................................................11

Pictured: GCT New York Terminal, Staten Island, New York. 

 
EXECUTIVE SUMMARY

This semiannual report summarizes the activities and accomplishments of the Federal 

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

period October 1, 2019 through March 31, 2020. The most significant activities of the OIG during 

the first half of fiscal year (FY) 2020 are summarized below and additional details can be found in 

subsequent sections of this report.

During this reporting period, the OIG completed three audits. Specifically, the OIG 

completed an audit of the Digital Accountability and Transparency Act of 2014 (A20-01), the FY 

2019 annual financial statement audit (A20-02), and audit of the FMC’s compliance with the 

Federal Information Security Management Act (A20-03). All of these audits are discussed in more 

detail later in this report. 

At the beginning of this period, there was one hotline complaint open. There were no new 

hotline complaints received during the period and the one hotline complaint remained open at the 

end of the reporting period. There were no new investigations or matters referred to prosecutorial 

authorities during this period and no investigations open at the end of the period. 

FEDERAL MARITIME COMMISSION

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

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

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

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

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

1920. 

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

the U.S. Senate, each serving five-year terms. On December 9, 2019, Commissioner Carl Bentzel 

was sworn into office and filled a vacant Commission position. As a result of Commissioner 

Bentzel joining the Commission, all five of the Commissioner positions are filled. 

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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. 

OFFICE OF INSPECTOR GENERAL

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

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

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

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

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

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

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

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

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

an audit or investigation. 

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

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

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

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

independence of the OIG. 

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

the IG and an auditor. In addition, the OIG has a memorandum of understanding (MOU) with the 

Treasury Inspector General for Tax Administration for the FMC OIG to obtain legal advice 

services to carry out its responsibilities under the Inspector General Act.

2 
OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Audits 

DATA Act Audit, 2019, A20-01. The OIG completed the audit and issued the final report on 

November 7, 2019. This was the second of three required DATA Act audits; the first audit was 

completed in November 2017. The Digital Accountability and Transparency Act of 2014 (DATA 

Act) was enacted May 9, 2014. In part, the DATA Act requires the Inspector General (IG) of each

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

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

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

Government-wide financial data standards by the Federal agency. 

The FMC’s DATA Act reporting process involves multiple parties: Treasury’s Bureau of 

the Fiscal Service, Administrative Resource Center (BFS ARC); the FMC’s Senior Accountable 

Official (SAO) (Managing Director); the FMC’s Office of Budget and Finance (OBF); and the 

FMC’s Office of Management Services (OMS). The FMC uses two systems for its spending data: 

Oracle Financials as its source system for all financial data, and the Procurement Request 

Information System Management (PRISM) as its source system for contract data. The FMC also 

uses the Federal Procurement Data System-Next Generation (FPDS-NG) for collecting and 

reporting data on agency procurements. 

The OIG tested 15 unique procurement transactions (records) to be reported on 

USAspending.gov for the first quarter of fiscal year 2019. These transactions were tested for 

completeness, accuracy, and timeliness. The OIG’s audit determined that the FMC’s error rate for 

completeness was 6.33%; the error rate for accuracy was 7.12%; and the error rate for timeliness 

was 24.21%. The majority of these errors were determined to be not attributable to the FMC, and 

the result of two different third-party system issues. The audit report contained three 

recommendations for improvement and FMC management agreed with the recommendations. In 

addition, the OIG concluded FMC management had effectively implemented the one audit 

recommendation from the 2017 DATA Act audit. 

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4 

Independent Auditors’ Report of the FMC’s FY 2019 Financial Statements, A20-02. 

The audit report was issued on November 19, 2019. The OIG contracted with Dembo Jones, P.C. 

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

contractor. The audit objectives were to opine on whether the FMC’s FY 2019 financial statements 

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

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

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

balance sheet as of September 30, 2019, and the related statements of net cost, changes in net 

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

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

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

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

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

audit report.

Audit of FMC’s Compliance with the Federal Information Security Management Act 

(FISMA) FY 2019, A20-03. The audit report was issued on October 25, 2019. The OIG 

contracted with Dembo Jones, P.C. to perform the audit and the OIG actively monitored and 

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

FMC’s information security program were to evaluate its security posture by assessing compliance 

with the FISMA and related information security policies, procedures, standards, and guidelines. 

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

applications. Audit testing included inquiry of FMC personnel, observation of activities, inspection 

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

testing covered a sample of controls as listed in National Institute of Standards and Technology’s 

(NIST) 800-53, Recommended Security Controls for Federal Information Systems and 

Organizations, Revision 4. The evaluation report contained three recommendations to address 

three findings. FMC management agreed with the three recommendations and one of the 

recommendations was implemented prior to report issuance. In addition, the OIG concluded the 

FMC had effectively implemented all six of the prior year FISMA recommendations. 
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. 

At the beginning of this period, there was one hotline complaint open. There were no new 

hotline complaints received during the period and the one hotline complaint remained open at the 

end of the reporting period. There were no new investigations or matters referred to prosecutorial 

authorities during this period and no investigations open at the end of the period. 

Memorandum of Understanding

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

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

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

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

understanding (MOU) with the Treasury Inspector General for Tax Administration for the FMC 

OIG to obtain legal advice services to carry out its responsibilities under the Inspector General 

Act.

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. 

5 
Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities

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

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

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

agencies; and 

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

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

workforce in the Office of Inspectors General. 

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

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

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

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

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

auditor training requirements. 

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

confirmed and those that are appointed by agency heads. The FMC OIG remains active in CIGIE 

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

monthly CIGIE meetings, and periodically assists CIGIE on special projects. 

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SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS

IG Act Reference Reporting Requirement Pages

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

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

abuses, or deficiencies

None

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

actions have not been completed

None

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

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

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

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

unsupported costs, and funds put to better use

8

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

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

and unsupported costs

None

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

that funds be put to better use

None

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

issued before the commencement of this reporting period for 

which no management decision was made by the end of the 

reporting period; for which comments were not returned 

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

any outstanding unimplemented recommendations

None

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

management decisions

None

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

general disagrees

None

Section 5(a)(13) Information under Section 804(b) of the Federal Financial 

Management Improvement Act (FFMIA) of 1996

None

Section 5(a)(14)(15) Peer review activity on FMC OIG 11, App. A

Section 5(a)(16) Peer review activity by FMC OIG on another OIG 11, App. A

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

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

statistical table under Section 5(a)(17)

None

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

employee where allegations of misconduct were 

substantiated

None

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

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

with the independence of the OIG

None

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

evaluation, and audit conducted that is closed and was not 

disclosed to the public; and investigation conducted by the 

OIG involving a senior Government employee that is closed 

and was not disclosed to the public

None
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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

Evaluation of the FMC’s 

Information Technology 

Inventory

A18-04 05/31/18 4 4 * 0 

*In a memorandum dated April 9, 2020, the Managing Director informed the IG that the 

agency has corrected all recommendations. The OIG plans to follow-up on the audit 

recommendations to verify the actions taken by management have addressed the issues 

identified during the evaluation. The follow-up review will enable the OIG to close the 

recommendations.

Administrative Control of 

Funds, Management 

Letter

A20-02 09/30/19 6 6 * 0 

*In a memorandum dated April 9, 2020, the Managing Director informed the IG that the 

agency has already corrected several of the recommendations and is actively working to 

implement the other recommendations. The OIG plans to follow-up on the 

recommendations to verify the actions taken by management have addressed the issues 

identified during the audit. The follow-up review will enable the OIG to close the 

recommendations.

TABLE II - Listing of Reports Issued

Report Title Assignment 

Number

Issue 

Date 

Questioned 

Costs

Unsupported 

Costs

Funds 

Put to 

Better 

Use

DATA Act Audit, 2019 A20-01 11/7/19 $0 $0 $0

Independent Auditors’ 

Report of the FMC’s FY 

2019 Financial Statements

A20-02 11/19/19 $0 $0 $0

Audit of FMC’s 

Compliance with the 

Federal Information 

Security Management Act 

(FISMA) FY 2019

A20-03 10/25/19 $0 $0 $0
TABLE III - Reports with Questioned Costs

Number

of 

Reports

Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0

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

Subtotal (A + B) 0 $0 $0

C. For which a management decision was made 

during the reporting period. 

0 $0 $0

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

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

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0

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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.

An external audit peer review of the FMC OIG audit office was completed on May 23, 

2019 by the U.S. Equal Employment Opportunity Commission OIG. A pass rating was issued and 

there were no recommendations contained in the system review report. 

In addition, the OIG completed an audit peer review of the U.S. Commodity Futures 

Trading Commission (CFTC) OIG during a prior reporting period and issued a peer review report 

on August 13, 2019. The FMC OIG issued a pass rating and there were no recommendations 

contained in the system review report. 
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.

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