FEDERAL MARITIME

COMMISSION An independent agency of the U.S. Government 

Chairman Michael A. Khouri

November 2019
FMC FISCAL YEAR 2019| Performance and Accountability Report| i

MESSAGE FROM CHAIRMAN KHOURI

Federal Maritime Commission

Washington, D.C. 20573-0001

Office of the Chairman

November 19, 2019

I am pleased to present the Fiscal Year (FY) 2019 Performance and Accountability Report (Report 

or PAR) for the Federal Maritime Commission (Commission or FMC). This report provides the 

results of this year’s independent audit of the FMC’s FY 2019 financial statements and measures our 

actual performance against the Commission’s five-year Strategic Plan.

The FMC ensures a competitive and reliable international ocean transportation supply system that 

supports the U.S. economy and protects the public from unfair and deceptive practices. 

International ocean shipping and the international supply chain are essential to our Nation's 

economy, moving more than $1 trillion in U.S. exports and imports annually. By implementing and 

enforcing the Shipping Act of 1984 and other related maritime statutes, the FMC plays a vital role in 

strengthening American economic competitiveness through international shipping.

The FMC accomplishes its mission by managing its limited resources against clear strategic goals and 

performance targets. The FY 2019 Performance and Accountability Report showcases the FMC’s 

achievements in meeting its strategic goals. Furthermore, this report shows our commitment to 

proper operational oversight, with safeguards in place to protect the agency and the public from 

financial risks. For the 16th consecutive year, the Commission's financial statements have earned an 

unmodified ("clean") opinion. The Commission’s annual assessment of internal controls over 

operations, systems, and financial reporting identified no material weaknesses. Both the 

performance and financial data contained in this report are reliable and complete.

Our Nation’s economy relies on the services provided by the industries and companies the 

Commission oversees. I am proud of the FMC’s role in ensuring competition and integrity for 

America’s ocean supply chain.

Sincerely, 

/s/

Chairman
FMC FISCAL YEAR 2019 | Performance and Accountability Report | ii

TABLE OF CONTENTS

MESSAGE FROM CHAIRMAN KHOURI i

PART ONE 1

MANAGEMENT’S DISCUSSION and ANALYSIS 1

History, Mission, and Organization ............................................................................................................2

Regulatory Responsibility and Oversight...................................................................................................6

Financial Performance Overview..............................................................................................................11

Financial Statement Highlights..................................................................................................................12

Analysis of Systems, Controls, and Legal Compliance...........................................................................14

Chairman Khouri’s Statement of Assurance ...........................................................................................18

PART TWO 19

ANNUAL PERFORMANCE REPORT 19

PART THREE 24

FINANCIAL INFORMATION 24

Message from the Chief Financial Officer / Managing Director.........................................................25

Principal Financial Statements...................................................................................................................26

Independent Auditors' Report...................................................................................................................30

PART FOUR 52

OTHER INFORMATION 52

Inspector General’s Statement on Prior Management and Performance Challenges .......................53

Comments on Inspector General’s Statement 56

Financial Statement Audit Summary.........................................................................................................57

Management Assurances Summary...........................................................................................................57

Improper Payments Information Act.......................................................................................................58

Fraud Reduction Report.............................................................................................................................61

Reduce the Footprint ..................................................................................................................................61

Civil Monetary Penalty Adjustment for Inflation ...................................................................................62

Biennial Review of User Fees ....................................................................................................................62

This Report can be downloaded at https://www.fmc.gov/about-the-fmc/performance-andaccountability-reports/
PART ONE 

MANAGEMENT’S DISCUSSION 

AND ANALYSIS 

Fiscal Year 2019
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 2

HISTORY, MISSION, AND ORGANIZATION

HISTORY

First constituted over 100 years ago as the United States Shipping Board in the Shipping Act of 1916, 

the Federal Maritime Commission was authorized in its current form as an independent Executive 

Branch agency in 1961. The Commission is an independent, non-CFO Act agency that regulates the 

international ocean transportation supply system (vessel liner carriers, ocean transportation 

intermediaries, and marine terminal operators). The FMC’s mission to ensure a competitive and 

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

the public from unlawful, unfair, and deceptive ocean transportation practices is vital to the Nation’s 

commerce. 

THE FMC TODAY

Moving more than $1 trillion in U.S. exports and imports each year, international ocean shipping is a 

critical component that supports our Nation’s commerce. Continuing a trend that started 10 years ago, 

the industry continues to adjust and react to challenging market conditions. Carriers and marine 

terminal operators (MTOs) have been forced to find ways to cut costs and realize greater efficiencies, 

whether individually or through consolidation, mergers, or operational cooperation with their 

competitors under agreements filed with the FMC. These changes in carrier- and MTO-concerted 

activity and market structure likewise require the FMC to quickly respond by timely and efficiently 

analyzing the competitive impact of proposed carrier and MTO agreements to guard against possible 

anticompetitive abuse of the filed agreement authority; to avoid unreasonable increases in 

transportation costs or decreases in transportation services; and to address other activities prohibited by 

the Shipping Act.

The FMC ensures a competitive and reliable international ocean transportation supply system in part by

balancing cost-containment strategies and cooperative working arrangements among carriers or MTOs

with the legitimate business needs of the Nation’s many exporters/importers to ensure their goods 

reach international markets efficiently and reliably. As the industry evolves and changes, the FMC will

continue its focus upon competition and integrity for America’s ocean supply chain by:

• Analyzing and monitoring key U.S. trade lanes;

• Assessing the competitive effects of agreement parties’ activities, particularly focusing on issues 

of costs (freight rates), vessel capacity (supply) and equipment availability upon the business 

community; 

• Licensing our Nation’s non-vessel-operating common carriers (NVOCCs) and freight 

forwarders, (collectively ocean transportation intermediaries, or OTIs), registering foreign-based 

NVOCCs, and administering an effective surety bond program to ensure payment of judgments 

for damages by OTIs; and

• Monitoring changes taking place in the provision of chassis for the inland movement of 

containerized goods, and the competitive effects of changing carrier alliance structures, 

particularly as they may affect concerted procurement of carrier services in U.S. ports.  

STATUTORY AUTHORITY

The principal statutes administered by the Commission, codified at 46 U.S.C. §§ 40101-44106, are:

• The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (Shipping 

Act);
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 3

• The Foreign Shipping Practices Act of 1988 (FSPA);

• Section 19 of the Merchant Marine Act, 1920 (1920 Act); and

• Sections 2 and 3 of Pub. L. No. 89-777, 80 Stat. 1350.

ORGANIZATION 

The FMC is composed of up to five Commissioners nominated by the President and confirmed by the 

Senate, each serving a staggered five-year term. The Commission is a bipartisan body; no more than 

three members of the Commission may be of the same political party. One Commissioner, designated 

by the President, serves as Chairman, Chief Executive, and Chief Administrative Officer of the 

Commission. 

Comprised of economists, attorneys, and experts in ocean transportation, most of the FMC’s staff is 

located at its Washington, D.C. headquarters; however, the Commission also maintains a presence in 

six major port locations nationwide. In addition to the Commissioners’ offices, the FMC staff are

organized into 10 bureaus and offices: 

Bureau of Certification and Licensing (BCL)

protects the public from financial harm through 

its OTI licensing, registration, and surety bonding 

programs. BCL also protects the public by 

requiring passenger vessel operators (PVOs) to 

maintain adequate financial coverage to 

reimburse cruise cancellations or to cover liability 

in the event of death or injury at sea. 

Bureau of Enforcement (BOE) is the 

prosecutorial arm of the Commission. Bureau 

attorneys serve as trial counsel in formal 

proceedings, and protect the shipping public by 

working closely with the Commission’s Area 

Representatives in investigations of potential 

violations of the Shipping Act and Commission 

regulations. BOE negotiates settlements and 

informal compromises of civil penalties, and may 

act as investigative officers in formal fact-finding 

investigations.

Bureau of Trade Analysis (BTA) analyzes and 

monitors the concerted activities of vesseloperating common carriers (VOCCs or carriers) 

and MTOs to detect and guard against possible 

anticompetitive abuse of authority contained in 

filed agreements which could result in substantial 

increases in transportation costs or decreases in 

transportation services. BTA also reviews and 

analyzes service contracts, monitors rates of 

foreign, government-owned controlled carriers; 

and reviews carrier-published tariff systems under 

the accessibility and accuracy standards of the 

Shipping Act. 

Office of the Administrative Law Judges 

(OALJ) resolves cases of alleged violations of the 

Shipping Act within the Commission’s 

jurisdiction. Through trial hearings and the 

issuance of an initial decision, the OALJ ensures 

that the rights of all parties are preserved.

Office of Consumer Affairs and Dispute 

Resolution Services (CADRS) provides 

assistance to shippers, OTIs, cruise operators and 

passengers, truckers, MTOs, and carriers by 

providing alternative dispute resolution (ADR) 

services, ombuds assistance, mediation, 

facilitation, and arbitration to resolve disputes 

involving cargo shipments, household goods 

shipments, and cruises.

Office of Equal Employment Opportunity 

(OEEO) advises and assists the Commission in 

carrying out its responsibilities relative to Titles 

VI and VII of the Civil Rights Act of 1964 (as 

amended), other laws, executive orders, and 

regulatory guidelines implementing affirmative 

employment; and the processing of EEO 

complaints.

Office of the Inspector General (OIG) is an 

independent and objective oversight office 

created within the FMC by the Inspector General 

Act of 1978 (as amended) to conduct and 

supervise audits, inspections, and investigations 

relating to the FMC’s programs; detect and 

prevent waste, fraud, and abuse; promote 

economy, efficiency, and effectiveness; keep the 

Chairman, Commissioners, and Congress fully 
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 4

informed of serious problems and deficiencies 

and recommend corrective actions; and, as 

appropriate, report violations of law to the U.S. 

Attorney General.

Office of the General Counsel (OGC) provides 

sound and timely legal services to the 

Commission and staff as it fulfills responsibilities 

that include: preparing final decisions, orders, and 

regulations for Commission approval and 

issuance; representing the Commission in 

litigation before the courts; providing technical 

and policy assistance to other government 

agencies engaged in international negotiations or 

discussions on shipping matters; and providing 

legal opinions to the Commission, its staff, and 

the general public in appropriate instances. OGC 

also oversees the Commission’s international 

affairs activities. The General Counsel is the 

Commission’s Chief Legal Officer.

Office of the Managing Director (OMD) is 

responsible for implementing the administrative 

directives of the Chairman; the management and 

coordination of Commission program offices and 

bureaus; and overseeing the agency’s Area 

Representatives located in six major port areas 

nationwide. It has direct oversight of the 

administrative offices of the Commission, which 

include the offices of Budget and Finance (OBF), 

Human Resources (OHR), Information 

Technology (OIT), and Management Services

(OMS). The Managing Director is the FMC’s 

Chief Financial and Operating Officer.

Office of the Secretary (OS) serves as the office 

through which all filings are made in Commission 

proceedings, notices of proceedings are given, 

and from which all official actions are issued by 

the Commission. The OS prepares and maintains 

agenda matters and actions taken by the 

Commission; maintains official files and records 

of formal proceedings; ensures compliance with 

the Freedom of Information, Government in the 

Sunshine, and Privacy Acts; responds to 

information requests from the public; issues 

publications and authenticates instruments and 

documents of the Commission; maintains a 

public reference/law library and a docket library; 

and oversees the organization and content of the 

Commission’s website.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 5

Federal Maritime Commission

Organization Chart*

*This is the current organization chart for the Commission, depicting a Congressionally-authorized 

realignment of the Office of Consumer Affairs and Dispute Resolution Services under the Managing 

Director, approved April 27, 2018. Counterpart changes in 46 C.F.R. Part 501 are currently pending 

publication.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 6

REGULATORY RESPONSIBILITY AND OVERSIGHT

The FMC ensures a competitive and reliable ocean transportation supply system by:

• Reviewing and monitoring agreements among and between carriers and among and between 

MTOs serving the U.S. foreign oceanborne trades to ensure that they do not cause unreasonable 

increases in transportation costs or decreases in transportation services;

• Maintaining and reviewing confidentially filed service contracts to guard against detrimental effects 

to shipping;

• Providing a forum for exporters, importers, and other members of the shipping public to obtain 

relief from ocean shipping practices or disputes that impede the flow of commerce;

• Ensuring common carriers’ tariff rates and charges are published in private, automated tariff 

systems and publicly available;

• Acting to address unfavorable conditions caused by foreign government or foreign business 

practices in U.S. foreign shipping trades; and

• Monitoring rates, charges, and rules of government-owned or -controlled carriers to ensure they 

are just and reasonable.

The FMC protects the public from financial harm and contributes to the integrity and security of the 

Nation’s import and export supply chains and ocean transportation system. FMC activities include:

• Licensing and registering NVOCCs, and licensing U.S.-based freight forwarders, collectively OTIs; 

• Administering and enforcing a surety bond program to ensure payment of judgments for damages 

by OTIs;

• Investigating and prosecuting violations of the Shipping Act and related statutes;

• Helping resolve disputes involving the shipment of goods or the carriage of passengers;

• Adjudicating private party complaints alleging Shipping Act violations; 

• Ensuring that passenger vessel operators maintain proper financial coverage to reimburse cruise 

passengers in the event their cruise is cancelled or to cover liability in the event of death or injury at 

sea; and

• Registering and annually verifying VOCC status of ocean common carriers operating in U.S. trades.

ALLIANCE, VESSEL SHARING, AND MARINE TERMINAL OPERATOR AGREEMENTS

The FMC monitors key trade lanes, and reviews and analyzes the competitive impact of agreements with 

particular emphasis on issues concerning carrier consolidation, adequate vessel capacity, and equipment 

availability. World-wide economic conditions continue to drive changes among ocean carriers and MTOs 

resulting in more complex or novel agreements filed with the Commission. 

For example, the trend toward agreements reflecting novel types of MTO cooperation continued as MTOs 

filed agreements to combine certain operations at the ports of Savannah and Charleston, and at terminals 

in San Juan, Puerto Rico, in FY 2019. Also, in FY 2019, unique cooperation among a group of five ocean 

carriers was reflected in the filing of the Digital Container Shipping Association Agreement. The purpose of the 

Agreement was to develop common information technology standards and guidelines for digital 

information used in the movement of cargo throughout the ocean transportation supply chain.

A comprehensive audit of all MTO Agreements on file with the Commission was completed during the 

fiscal year. The audit eliminated obsolete and inactive agreements from the FMC’s publicly-available online 
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 7

agreements library. Additionally, all MTO agreements may now be filed and amended using the online 

eAgreements system which eliminated the costs associated with paper agreement filings.

During FY 2019, working with the Office of the General Counsel, BTA developed a new process to track 

and review incoming and existing agreements subject to new provisions of the Frank LoBiondo Coast 

Guard Authorization Act, Pub. L. No. 115-282 (LoBiondo Act), regarding joint procurement by carriers of 

certain covered services. BTA is in the process of identifying existing agreements that may fall under the 

LoBiondo Act, and will place new monitoring requirements on agreements containing authority to jointly 

purchase certain covered services to ensure any future activity is timely reported to the FMC. The initial 

phase of this review has resulted in agreement parties removing language that would bring them under the 

LoBiondo reporting requirements and in terminating other, outdated agreements.

As the industry responds to trade conditions and economic developments, the FMC will continue to

analyze agreements for anti-competitive behavior, and address unreasonable practices as necessary. 

LICENSING PROCESS

The Commission continued to streamline its OTI licensing processes. In May 2019, the Commission 

voted to update its OTI rules to clarify who is eligible to be a Qualified Individual when partnerships are 

involved; require NVOCCs to file a Form FMC-1 (providing its tariff location) before being issued a 

license; and to clarify renewal processes and timelines to allow the Commission to evenly distribute the 

number of licenses identified for renewal each month, ensuring efficient and timely responsiveness to the

industry.

In FY 2020, the Commission will consider additional regulatory reforms related to its PVO program and

monitoring procedures. The Commission also will continue to leverage information on surety bond usage 

to measure how effectively bonds are protecting the industry and the public. 

PORT DEMURRAGE, DETENTION, AND FREE TIME PRACTICES 

In March 2018, the FMC initiated Fact Finding 28 to investigate port demurrage, detention, and free time 

practices. Specifically, reports about uncertainty stemming from differing practices between MTOs and 

carriers on the collection of charges from shippers, consignees, drayage providers, or carriers led to 

questions about whether current practices allow for a competitive and reliable American freight delivery 

system. Commissioner Rebecca F. Dye was appointed as the Fact-Finding Officer. Commissioner Dye’s 

December 2018 Report on findings recommended in part that the Commission organize FMC Innovation 

Teams composed of industry leaders who would meet on a limited, short-term basis to refine 

commercially viable demurrage and detention approaches. In the spring of 2019, FMC Innovation Teams 

met and worked on demurrage and detention practices. In May 2019, Commissioner Dye testified at the 

Surface Transportation Board oversight hearing on demurrage and accessorial charges, speaking about the 

Commission’s innovation team approach to develop commercial solutions to freight delivery system 

operational problems. A final report on the last phase of Fact Finding 28 was issued in September 2019. 

On September 13, 2019, the Commission initiated a related rulemaking, Docket No. 19-05, Interpretive Rule 

on Detention and Demurrage Under the Shipping Act, seeking public comment on its interpretation of the 

Shipping Act prohibition against failing to establish, observe, and enforce just and reasonable regulations 

and practices relating to or connected with receiving, handling, storing, or delivering property with respect 

to demurrage and detention. The due date for comments responding to the proposed interpretive rule is 

October 31, 2019.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 8

SECURITY INITIATIVES AND CROSS-AGENCY COOPERATION

The FMC remains active in security initiatives, as they relate to U.S. ocean commerce, and works to 

coordinate the use of available database systems with other agencies engaged in homeland security to 

improve identification of entities providing and utilizing maritime transportation services. To facilitate 

these activities, the FMC executed a Memorandum of Understanding (MOU) with the U.S. Customs and 

Border Protection (CBP) to provide a more efficient utilization of existing systems and services, such as 

CBP’s Automated Commercial Environment (ACE). The FMC also has an active Inter-Agency 

Agreement (IAA) with the Census Bureau, U.S. Department of Commerce, for access to the Census’ 

Automated Export System (AES) database. These relationships allow the FMC to access confidential U.S. 

export shipment data to accomplish its mission and to protect the Nation’s security interests. The 

Commission also supports the Nation’s economic and security interests by partnering with the National 

Intellectual Property Rights Coordination Center (IPR Center), a U.S. Department of Homeland Securityled partnership of 25 federal and international agencies targeting intellectual property- and trade-related 

crimes. This partnership has resulted in coordinated enforcement efforts to address international criminal 

activity. 

ENFORCEMENT, DISPUTE RESOLUTION, AND PUBLIC INFORMATION

The Commission is aware of the ever-increasing pressure of industry consolidation and port congestion 

and its impact on U.S. exporters and their need for efficient ocean transportation to reach foreign markets. 

The FMC will continue its focus on monitoring agreements, service contracts, and tariffs in key trades as 

barometers of market cycles and shifts in the balance of supply and demand; as well as expand and 

promote its compliance-focused program to monitor and audit carrier, NVOCC, and ocean freight 

forwarder operations. 

The Commission’s Bureau of Enforcement, through the Commission’s statutory and regulatory mandate, 

protects the shipping public and ensures industry adherence to U.S. shipping laws. The Commission 

completed a significant informal enforcement action involving four carriers in the American Samoa trades 

with Australia and New Zealand pursuant to agreements that were neither filed nor effective as required by 

the Shipping Act. The efforts resulted in a compromise agreement with the four carriers, including a 

payment of $350,000 and in the filing of an agreement among these carriers with the Commission that 

complies with the Shipping Act.

The Commission provides information in many forms to educate regulated entities, stakeholders, and the 

public about resources, remedies, and regulatory requirements. The Commission’s website offers 

brochures, how-to guides, forms and applications, reference libraries, news releases, information on 

investigations, and advice on topics such as FMC regulations, OTI licensing, household goods moves, and 

use of ADR services to assist parties with resolving cruise- and cargo-related disputes. 

The Commission’s CADRS office receives time-sensitive requests for assistance from shippers and 

carriers. Area Representatives, strategically located near six maritime ports, operate as the Commission’s 

front line for questions and issues facing the industry. The Commission’s Office of the Secretary updates 

the FMC’s website and social media frequently, providing time-sensitive notifications and important 

information to the public. The FMC also responds to requests for information from the press and the 

public, delivering key information directly to potentially affected shippers and consumers. 

The FMC assists with industry-driven solutions to ocean shipping issues. For example, the Commission 

regularly provides outreach and education to the shipping industry, stakeholders, and other government 

entities on the statutes it implements. Commissioners and staff address industry and stakeholder groups as 

speakers and panelists to provide information on the latest issues related to Commission activities and 

international commerce.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 9

MISSION CHALLENGES

The Commission monitors and keeps abreast of the daily issues and challenges facing the United States’ 

ocean transportation system and its stakeholders, and focuses its efforts to foster the Nation’s international

trade and economic growth. The FMC accomplishes its strategic goals by continuing to improve staff 

efficiency and closely managing resources to enforce its governing statutes and regulations to protect the 

shipping public. As financial resources permit, the FMC will continue to prioritize investments needed in 

information technology (IT) to improve information security, efficiency, and greater public access, while 

reducing costs. 

REGULATORY REVIEW

As economic conditions alter the state of our trades, FMC regulations are revised to respond to new 

circumstances. Toward the goal of eliminating or reforming outdated regulations, the Commission 

designated its Managing Director as the Regulatory Reform Officer, who leads an internal team to identify 

regulations that have become less relevant or are unduly burdensome. The Commission’s Plan for Regulatory 

Reform of Existing FMC Rules (Regulatory Reform Plan), outlines the FMC’s plan to identify regulations that 

may be suitable for reform or elimination, and establishes a schedule to consider further review and action 

on each identified regulation. The Regulatory Reform Plan’s list of administrative and regulatory 

provisions, that when amended or eliminated, will make it easier and less costly for companies to do 

business, while permitting the FMC to maintain competition and integrity for America’s ocean supply 

chain. In recent years, the Commission has expanded flexibilities for OTIs through regulatory reform, 

issued an interpretive rule addressing unjust and unreasonable practices and regulations under the Shipping 

Act, and is currently updating OTI rules to clarify licensing requirement and processes

PROGRAM PERFORMANCE OVERVIEW

The Commission provides a performance plan to Congress, pursuant to the Government Performance 

and Results Act (GPRA). The FMC’s Strategic Plan for Fiscal Years 2018-2022 (Strategic Plan) is posted on 

its website. The FMC’s FY 2019 Annual Performance Report is presented in Part Two of this Report.

ACHIEVING STRATEGIC GOAL RESULTS

The Commission’s Strategic Plan provides the foundation for planning and budgeting activities. The Plan 

sets goals and objectives for each fiscal year, and contains targets and measures linked to objectives via 

strategies. These objectives, strategies, targets, and measures drive the agency’s budgetary process.

Funding and Full-Time Equivalent (FTE) staffing levels are integrated into the Commission’s performance 

budget planning document by strategic goal to clearly identify the budgetary and staff resources committed 

to the performance of each goal. During FY 2019, the Commission met or exceeded all but one of its 

performance targets.

STRATEGIC MANAGEMENT OF HUMAN CAPITAL

In 2019, the FMC continued to implement the strategic goals, objectives, and strategies outlined in its 

2012-2017 Human Capital Plan. The Commission’s Human Capital Plan was developed under the Office 

of Personnel Management’s (OPM) Human Capital Assessment and Accountability Framework, and 

provides for recruiting and retaining a talented workforce and appropriately managing succession in the 

Commission’s relatively small workforce. Currently, a new 2020-2022 Human Capital Operating Plan

(HCOP) is being constructed to reflect the results and changes of strategies and goals in alignment with 

the FMC’s Strategic Plan for FY 2018-2022, and to comply with the spirit and direction from OPM, as 

outlined in the revised Title 5 Code of Federal Regulations, part 250, subpart B. In doing so, the FMC 

developed and plans to adopt a new HCOP during FY 2020. 
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 10

Consistent with OMB’s April 17, 2017 guidance, Comprehensive Plan for Reforming the Federal Government and 

Reducing the Federal Civilian Workforce, the Commission continued implementing several initiatives under its 

5-year Agency Reform and Long-Term Workforce Plan FY 2018–2022 during the fiscal year, including:

• reducing a total of 7 SES and supervisory positions to-date;

• establishing a new two-tier SES structure to realign and control SES salary and costs;

• realigning and combining functions within the Commission; and

• continuing to emphasize the achievement of operational efficiencies and improvement of customer 

service through automation projects.

Strong leadership remains a critical asset. The Commission continues to engage in succession management 

and projecting its future needs by creating and implementing an agency Stay Interview process; offering 

additional leadership opportunities under the agency’s Leadership Development Program; and realigning 

and combining functions across the Commission to allow for greater career development opportunities.

Staff are being trained and developed to assume greater levels of responsibility, and to allow the agency to 

continue to maintain talented and knowledgeable leadership to meet the challenges of the future.

Continuous training and development in leadership competencies will prepare the next generation of 

leaders at the Commission.

COMPETITIVE SOURCING

The FMC submitted its FY 2019 Federal Activities Inventory Reform Act (FAIR Act) inventory to OMB 

in June 2019. The inventory identified 56 of the agency’s 129 authorized FTEs as commercial activity 

FTEs. No challenges to its commercial inventories have ever been received.

IMPROVED FINANCIAL PERFORMANCE 

The FMC received an unmodified (“clean”) opinion on its FY 2019 financial statements, and will continue

its ongoing efforts to improve operations and achieve unmodified audit opinions in the future.

EXPANDED E-GOVERNMENT

The FMC works diligently to provide the public with exceptional customer service. In FY 2019, the 

Commission completed a redesign of its public-facing website, www.fmc.gov, which significantly improves 

public access to Commission resources and key content. All content was migrated to a responsive 

platform allowing the FMC’s website to resize on any mobile device. This migration also meets new 

government-wide website requirements and makes information easier to locate. The FMC regularly 

updates the Commission’s website and social media, providing timely and important information to the 

public. 

The Commission continues its multiyear enhancement of IT systems to bring efficiencies and process 

improvements across the agency. This will also make finding information and completing required forms

faster and easier for the public and regulated companies doing business with the FMC. The Commission’s 

Information Technology Strategic Plan covering FY 2018-2022 (IT Strategic Plan) delivers cost efficiencies 

and fiscal responsibility while planning and managing technology solutions and resource allocations for 

ongoing and future needs. The IT Strategic Plan leverages digital transformation and initiatives for

continuous improvement of customer services and identifies several overarching challenges 

including: consolidation and upgrade of legacy applications and infrastructure with relevant technologies; 

implementation of automation to streamline workflow processes and improve efficiency; and integration

of security standards and frameworks to protect from cybersecurity risks all agency-owned/issued assets 

and commercially sensitive data.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 11

The Commission continues to work with the Department of Homeland Security (DHS) in provisioning 

technology infrastructure to comply with FEDRAMP and DHS continuous monitoring requirements for 

network security. Internal security tools were deployed to effectively monitor and address network 

operations, including file integrity; password sufficiency; and probing for open ports and other externally 

visible points of attack.

FINANCIAL PERFORMANCE OVERVIEW

The FMC’s financial condition as of September 30, 2019, is sound, and internal controls are in place to 

ensure that funds are used efficiently and effectively, and that its budget authority is not exceeded. The 

FMC’s accounting services provider, the Bureau of the Fiscal Service (BFS), prepared the financial 

statements as required by the Accountability of Tax Dollars Act of 2002. They have been prepared from, 

and are fully supported by, the books and records of the FMC in accordance with Federal Generally 

Accepted Accounting Principles (GAAP), standards approved by the Federal Accounting Standards 

Advisory Board (FASAB), and OMB Circular A-136, Financial Reporting Requirements.

The principal financial statements provided in this document are prepared to report the financial position 

and results of the operations of the FMC, pursuant to the requirements of 31 U.S.C. § 3515(b). Reports 

used to monitor and control budgetary resources are prepared from the same books and records. 

SOURCE OF FUNDS

The FMC has single-source funding, Salaries and Expenses, funded by an annual appropriation available 

for commitments and obligations incurred during the fiscal year in which the authority was granted. 

Congress approved FY 2019 appropriations for the FMC in the amount of $27,490,000 through P.L. 116-

6, the same level as the FY 2018 final appropriation level. Additionally, the Commission had reimbursable 

budget authority of $84,364 for work performed by one FMC employee at another government agency. 

The FMC collects remittances for user fees and penalties; however, it is not authorized to offset any of its 

budget authority by using these funds. Collections are deposited directly into the Treasury General Fund. 

This information is captured in the Statement of Custodial Activity found in the Financial Information

section of this report.

APPROPRIATION HISTORY

Appropriations History

Fiscal Years 2010-2019 ($000)

 $-

 $5,000

 $10,000

 $15,000

 $20,000

 $25,000

 $30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 12

FULL-TIME EQUIVALENT HISTORY

The FMC’s FTE level is largely driven by its annual appropriation level. The FMC currently has on board 

four of its five statutorily authorized Commissioners.

The continued pace of retirements and separations in FY 2019 resulted in a lower than anticipated FTE 

level, at 112.4 FTEs, with 116 employees on board at fiscal year’s end. The Commission endeavors to 

develop the appropriate mix of staffing and other available resources to ensure effective accomplishment 

of its mission. 

Full-Time Equivalent History

Fiscal Years 2010-2019

127 128 123 119 113 117 123 125

118 112

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

USES OF FUNDS 

During FY 2019, obligations against the FMC’s appropriation totaled $27,145,957 representing 98.8

percent of the appropriation. Salaries and benefits are the single largest expense category at $18,419,268,

or 67.0 percent of total budget. The second largest category, rent and building security services, is

approximately $3.9 million, or 14.2 percent of the total budget. Other administrative expenses equal 17.6 

percent. The unexpended balance of $344,043 (1.3 percent) will be retained for allocation to legitimate 

increases to existing FY 2019 obligations.

AUDIT RESULTS

The FMC again received an unmodified (“clean”) opinion on its FY 2019 financial statements from the 

auditing firm of Dembo Jones, P.C., under contract through the FMC’s OIG. Comparative statements 

may be found in the Financial Information section of this report.

FINANCIAL STATEMENT HIGHLIGHTS

The financial statements were prepared to report the financial position and results of operations of the 

Commission pursuant to the requirements of 31 U.S.C. § 3515(b). The statements were prepared from the 

books and records of the Commission in accordance with the formats prescribed by OMB. 

The FMC’s financial statements summarize the financial position and financial activity of the agency. The 

financial statements, footnotes, and the remainder of the required supplementary information appear in 

their entirety in the Financial Information section of this report. A brief analysis of the principal statements 

follows.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 13

SUMMARY OF ASSETS

The FMC’s assets were $7,302,620 as of September 30, 2019. This represents an increase from FY 2018 of 

$951,167. The FMC’s assets reported in the balance sheet are summarized in the table below. 

The Fund Balance with Treasury of $7,250,803 represents the FMC’s largest asset and comprises 99.3

percent of the agency’s total assets. The Fund Balance with Treasury is comprised only of annual 

appropriations maintained by the Department of the Treasury to address current liabilities. 

Accounts Receivable as of September 30, 

2019, was $8,708 for outstanding 

receivables billed to both Federal and nonFederal entities. This accounts for 0.12

percent of the FMC’s assets. 

Capital Assets, also known as Property, 

Equipment and Software, accounts for 0.6

percent of the FMC’s total assets as of 

September 30, 2019. The net value of 

$43,109 accounts for the depreciation of all assets and represents the current book value of those assets.

SUMMARY OF LIABILITIES

The FMC’s liabilities totaled $2,573,541 as of September 30, 2019, an increase of $361,832 from FY 2018. 

The majority of the increase is related to an increase in accrued liabilities and accounts payable.

The FMC’s Accounts Payable as of 

September 30, 2019, was $287,503. This 

represents the funds owed for goods and 

services received from vendors. The accrued 

liabilities of $2,115,779 represent future 

costs, such as accrued annual and sick leave 

balances and workman’s compensation that 

are not covered by current budgetary

resources. Accumulated leave costs are 

recognized as they are taken, and Workman’s 

Compensation costs are recognized as they 

are paid out.

ANALYSIS OF CHANGES IN NET POSITION SUMMARY

The Changes in Net Position Summary is a summary of two factors, Unexpended Appropriations and 

Cumulative Results of Operations. The total net position for FY 2019 is an increase of $589,335 from 

FY 2018.

Unexpended Appropriations 

represent the amount of unobligated 

and unexpended budget authority for 

the 5-year period ending on 

September 30, 2019. Unobligated 

balances are the amount of 

appropriations or other authority 

FY 2019 FY 2018

Unexpended Appropriations $6,130,844 $5,326,391

Cumulative Results of Operations ($1,401,765) ($1,186,647)

Total Net Position $4,729,079 $4,139,744

Changes in Net Position Summary as of

 September 30, 2019

FY 2019 FY 2018

Fund Balance with Treasury $7,250,803 $6,234,624

Accounts Receivable $8,708 $10,462

Capital Assets $43,109 $106,367

Other $0 $0

Total Assets $7,302,620 $6,351,453

Summary of Assets as of 

 September 30, 2019

FY 2019 FY 2018

Accounts Payable $287,503 $105,107

Payroll Taxes $168,237 $146,929

Federal Employee Benefits $2,022 $3,334

Custodial Liabilities $0 $0

Accrued Liabilities $2,115,779 $1,956,339

Total Liabilities $2,573,541 $2,211,709

Summary of Liabilities as of 

 September 30, 2019
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 14

remaining after deducting the cumulative obligations from the amount available for obligation for the 

same period. The Cumulative Results of Operations (the cumulative excess of financing resources over 

expenses) is the net result of FMC’s operations for all active fiscal years. 

ANALYSIS OF NET COST SUMMARY

The analysis of Net Cost Summary presents the net cost of FMC’s Programs as identified in the Annual 

Report. The two agency programs are Operational and Administrative and Inspector General. Beginning 

with FY 2019, the FMC consolidated the Formal Proceedings and Equal Employment Opportunity 

programs into the Operational and 

Administrative program. The 

Statement of Net Costs shows the net 

cost of operations for the agency as a 

whole and its sub-organizations and/or 

programs. Net Costs compared to 

Budgetary Resources can be found in 

the Financial Information section of this 

report. This table reflects costs 

attributable to all active fiscal years 

(2015-2019).

ANALYSIS OF THE STATEMENT OF BUDGETARY RESOURCES

The Statement of Budgetary Resources (SBR) shows the source of the agency’s budgetary resources, the 

status of those resources at the end of the reporting period, and the relationship between the two. Total 

budgetary resources must be equal to the status of budgetary resources at all times. A more detailed SBR 

can be found in the Financial Information section of this report. During FY 2019, the FMC had a total of 

$28,699,732 available,

representing an increase

of $691,499 from 2018

in budgetary resources. 

The budgetary 

resources represent 

financial activity during 

the accounting period 

for the five active fiscal 

years (2015-2019).

ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

The Commission’s internal controls are fundamental to the systems and processes used to manage its 

operations and achieve its strategic goals. The Chairman’s Statement of Assurance in the following section

notes that there are no material weaknesses or instances of nonconformance to report for FY 2019. 

Additionally, in line with the requirements of OMB Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control, the Commission’s Enterprise Risk Management Committee identifies, 

measures, and assesses risk points across the agency. The Committee’s risk profile is used in conjunction 

with existing internal controls to improve the Commission’s accountability and effectiveness.

FY 2019 FY 2018

Operational and Administrative $27,519,442 $20,632,539

Formal Proceedings N/A $7,077,950

Office of the Inspector General $372,938 $394,371

Equal Employment Opportunity N/A $109,923

Total Net Cost $27,892,380 $28,214,783

Net Cost Summary as of 

 September 30, 2019

 FY 2019 FY 2018

Incurred $27,339,179 $27,138,443

Unobligated Balance Unavailable $1,016,510 $200,962

Unobligated Balance Available $344,043 $668,828

Total Status of Budgetary Resources $28,699,732 $28,008,233

Statement of Budgetary Resources as of

 September 30, 2019
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 15

MANAGEMENT ASSURANCES

The Federal Managers’ Financial Integrity Act (FMFIA or Act) mandates that agencies establish controls 

that reasonably ensure that: 

• obligations and costs comply with applicable laws;

• assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and 

• revenues and expenditures are properly recorded and accounted for.

This Act encompasses program, operational, and administrative areas, as well as accounting and financial 

management. The FMFIA requires that the Chairman provide an assurance statement of the adequacy of 

management controls and conformance of financial systems with Government-wide standards, that the 

Commission’s managers are held accountable for efficient and effective performance of their duties in 

compliance with applicable laws and regulations, and for maintenance of the integrity of their activities 

through the use of controls. 

Chairman Khouri has provided his annual assurance statement in this report based on various sources,

including knowledge of the daily operation of Commission programs and activities, regular discussions 

with the Managing Director and the Directors of the Offices of Budget and Finance and Management 

Services, audits of the financial statements, and implementation of the Commission’s Strategic Plan. 

Additionally, the Chairman meets regularly with the Commission’s Senior Management Team, and receives 

regularly-scheduled reports from the FMC’s Inspector General and OEEO Director. 

Any deficiencies identified in management control would be addressed at the highest management levels 

within the FMC. For example, any corrective actions for significant deficiencies identified in the 

information technology area would be overseen directly by the agency’s Chief Information Officer (CIO).

During the fiscal year, the IG identified no significant deficiencies and there were no significant 

management decisions made on which the IG disagreed. During FY 2019, management and the OIG 

reached agreement on all OIG audit recommendations. Management resolved or worked to address a 

number of recommendations from these reviews, and will work to address any remaining open 

recommendations during FY 2020. 

DEBT COLLECTION IMPROVEMENT ACT OF 1996

The Debt Collection Improvement Act (DCI) enhances the ability of the government to service and 

collect debts, as it centralized the collection of non-tax delinquent debt owed to the government. Federal 

agencies are required to refer delinquent accounts in excess of 180 days to Treasury for collection. 

Collection of the Commission’s delinquent debts is conducted by the Bureau of the Fiscal Service through 

the Cross-Servicing Program and Treasury Offset Program, where the names and taxpayer identification 

numbers (TIN) of the delinquent entities are matched against the TINs of recipients of government 

payments. The balance owed to the government is deducted or offset from the payment to the entity to 

satisfy the debt. The goal is to minimize the amount of delinquent debt owed to the government. During 

FY 2019, the FMC effectively managed debt collection in accordance with the DCI and delinquent 

accounts were timely submitted to Treasury.

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014

The Digital Accountability and Transparency Act of 2014 (DATA Act) is an amendment to the Federal 

Funding Accountability and Transparency Act of 2006 (Public Law No. 109-282) which required the 

establishment of government-wide data standards for spending information that agencies report to 

Treasury, OMB, and the General Services Administration. On May 9, 2017, the Commission began 

reporting standardized spending information. 
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 16

Additionally, the DATA Act required Treasury and OMB to publish standardized spending information 

for free access and download on the government’s USASpending.gov website beginning on May 9, 2018.

The Commission uses the infrastructure and financial system maintained by its Federal Shared Service 

Provider, the Administrative Resource Center (ARC), Bureau of the Fiscal Service (BFS). The 

Commission continued to work closely with ARC during the fiscal year to ensure that it was on target with 

DATA Act requirements. 

Fiscal Year 2019 was the second year of DATA Act implementation. Working with our financial services 

provider, the FMC complied with all requirements and timely submitted all DATA Act certifications.

PROMPT PAYMENT ACT OF 1982

The Prompt Payment Act requires agencies to make timely payments to vendors for supplies and services, 

to pay interest penalties when payments are made after the due date, and to take cash discounts when they 

are economically justified. In FY 2019, the FMC maintained a 95 percent on-time payment rate.

In FY 2019, the FMC paid $618 in interest payments as a result of 24 late payments. The FMC will work

towards achieving 100 percent on-time vendor payments in future years.

PERFORMANCE MEASURE SUMMARY

The FMC does not have an in-house financial accounting system, and does not receive a Performance 

Measure Summary from the Department of the Treasury. The agency acquires travel, procurement, 

accounting, and financial services from Treasury’s BFS. The Commission verifies and reconciles all 

financial statements and reports prior to submission.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 17

INSPECTOR GENERAL ACT OF 1978, AS AMENDED IN 1988, AND THE INSPECTOR GENERAL REFORM 

ACT OF 2008

Section 5(b) of the Inspector General Act of 1978 requires agencies to report on final actions taken on 

OIG audit recommendations. Action was taken to close all audit recommendations during the year. No 

significant deficiencies or material weaknesses were identified during FY 2019.

Inspector General-Issued Audits, Reports, and Evaluations -- FY 2019

A19-01: Independent Auditors’ Report of the FMC’s FY 2018 Financial Statements

Date Issued Recommendations Issued Remediated in FY 2019

11/2018 None, and no management letter issued N/A

A19-02: Evaluation of the FMC’s Compliance with the Federal Information Security 

Management Act FY 2018

Date Issued Recommendations Issued Remediated in FY 2019

10/2018 5 6*

*Includes the remediation of one recommendation remaining open from prior year’s FISMA, A18-02.

TREASURY ASSURANCE STATEMENT – USA SPENDING RECONCILIATION

The FMC has implemented its plan to ensure data completeness and accuracy on www.USASpending.gov 

by using control totals with financial statement data, and comparing samples of financial data to actual 

award documents. The prime Federal award financial data reported on www.USASpending.gov is correct 

at the reported percentage of accuracy, and the FMC has adequate internal controls over the underlying 

spending.

LIMITATIONS OF THE FINANCIAL STATEMENTS

The principal financial statements are prepared to report the financial position and results of operations of 

the Commission, pursuant to the requirements of 31 U.S.C. 3515(b). The statements are prepared from

the books and records of the Commission in accordance with Federal GAAP and the formats prescribed 

by OMB. Reports used to monitor and control budgetary resources are prepared from the same books 

and records. The financial statements should be read with the understanding that they are for a 

component of the U.S. Government.
FMC FISCAL YEAR 2019 | Performance and Accountability Report | 18

CHAIRMAN KHOURI’S STATEMENT OF ASSURANCE

The Federal Maritime Commission’s managers are responsible for 

establishing and maintaining effective internal control and financial 

management systems that meet the objectives of Sections 2 and 4 of 

the Federal Managers’ Financial Integrity Act of 1982 (FMFIA). The 

FMC provides an unqualified statement of assurance that its internal 

controls support reliable financial reporting, effective and efficient

programmatic operations, and compliance with applicable laws and 

regulations. The Commission’s financial management systems meet 

the objectives of the FMFIA with no material weaknesses, and no 

instances of noncompliance.

The FMC conducted its annual assessment of internal control over 

programmatic operations in accordance with the Office of 

Management and Budget (OMB) Circular A-123, Management’s 

Responsibility for Enterprise Risk Management and Internal Control (A-123) 

guidelines. Based on the results of this assessment, the Commission 

can provide reasonable assurance that its internal control over 

operations, reporting, and compliance were operating in compliance 

with applicable laws and guidance, and no material weaknesses were found as of September 30, 2019.

Additionally, the FMC conducted its assessment of the effectiveness of internal control over financial 

reporting, which includes safeguarding assets and compliance with applicable laws and regulations, in 

accordance with the requirements of Appendix A of A-123. Based on the results of that evaluation, the 

FMC can provide reasonable assurance that its internal control over financial reporting as of September 

30, 2019 was operating effectively, and no material weaknesses were found in the design or operation of 

the internal control over financial reporting.

In accordance with the guidance established in A-123, Appendix D, Compliance with the Federal Financial 

Management Improvement Act of 1996 (FFMIA), the CFO reviewed audit reports and other sources of 

information, and as of September 30, 2019, can provide reasonable assurance that the FMC’s financial 

systems substantially comply with Federal financial system requirements, applicable Federal accounting 

standards, and the U.S. Treasury standard general ledger at the transaction level, as required.

These Commission assessments ensure effectiveness and efficiency of operations, reliability of reporting 

for internal and external use, and compliance with applicable laws and regulations. 

/s/

Michael A. Khouri

Chairman

November 19, 2019
PART TWO 

ANNUAL PERFORMANCE 

REPORT 

Fiscal Year 2019
FMC FISCAL YEAR 2019 Performance and Accountability Report  20

ANNUAL PERFORMANCE REPORT

INTRODUCTION

The FMC’s performance management system includes specific strategic goals, performance 

measures, and targets. The strategic goals represent the FMC’s mission and reflect the overall 

outcomes and objectives the agency is working to achieve. This report describes progress towards 

performance targets in 2019 in furtherance of the Commission’s mission to ensure a competitive 

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

protects the public from unfair and deceptive practices. The FMC’s strategic goals and objectives 

are:

Strategic Goal 1: Maintain a Competitive and Reliable International Ocean Transportation 

Supply System. 

• Ensure that actions under filed agreements do not result in unreasonable increases in 

transportation costs and/or unreasonable decreases in transportation services.

Strategic Goal 2: Protect the Public from Unlawful, Unfair and Deceptive Ocean 

Transportation Practices. 

• Identify and take action to end unlawful, unfair, and deceptive practices. 

• Prevent public harm through licensing and financial responsibility requirements.

• Enhance public awareness of agency resources, remedies, and regulatory requirements 

through education and outreach. 

• Impartially resolve international shipping disputes through alternative dispute resolution 

and adjudication. 

Eight performance goals were quantitatively measured during the fiscal year. All but one measure 

reached or exceeded FY 2019 targets. Each measure, target, and actual result is reported in Table 1

below and includes a description of the data used to measure performance, and an explanation of 

the procedures used to validate and ensure integrity of the reported result. 

Trend data for performance measures is shown in Table 2 and reflects continuous increases in 

agency efficiency and productivity – a result of both improved and streamlined processes, and 

enhanced focus on improving the critical processes being measured. 

The agency has forwarded its Performance and Accountability Report (inclusive of this Annual 

Performance Report) to the President, OMB Director, appropriate Congressional committees, and 

others as dictated by OMB Circular A-136, Revised. Additionally, this report has been placed on the 

FMC’s public website to ensure that it is accessible to interested parties. All Commission employees 

have been advised to review this report. 
FMC FISCAL YEAR 2019 Performance and Accountability Report  21

TABLE 1: SUMMARY OF PERFORMANCE MEASURE RESULTS – FY 2019

Targeted performance compared to actual results.

Strategic Goal No. 1: Maintain a competitive and reliable international 

ocean transportation supply system.

Performance Measures

FY 2019

Target

FY 2019

Actual

Measure: Percentage of FMC-filed agreements reviewed at Commission level which 

are modified through negotiation to mitigate anti-competitive effects.

Validation: This outcome goal is measured using data derived from the eAgreements

electronic filing system which identifies agreements requiring Commission level review. 

Each of those filings is then examined to determine whether any changes were made to 

the originally filed agreement that mitigated anticompetitive effects of the agreement. 

This measure is tracked on an ongoing basis.

51% 67%

Measure: Percentage of agreement monitoring reports reviewed within 30 days of 

receipt to detect actionable information including market distorting behavior.

Validation: This outcome goal is measured using data contained in the eMonitoring 

system used for the electronic filing of agreement monitoring submissions. 

Performance is measured by comparing the file receipt date to the date that the filing 

was reviewed by staff analyst. The data is constantly under review and frequently 

updated.

66% 79%

Strategic Goal No. 2: Protect the public from unlawful, unfair, 

and deceptive ocean transportation practices.

Performance Measures

FY 2019

Target

FY 2019

Actual

Measure: Percentage of enforcement actions taken under the Shipping Act of 1984 

successfully resolved through favorable judgment, settlement, issuance of default 

judgment, or compliance letter or notice.

Validation: This outcome goal is measured by examining enforcement case inventory 

and physically counting the number of cases resolved. The inventory is maintained for 

case load management, and monthly and quarterly reporting purposes. The data is 

constantly under review and frequently updated.

77.5% 97%

Measure: Percentage of decisions on completed OTI license applications rendered 

within 60 calendar days of receipt, facilitating lawful operation of OTIs with the 

appropriate character and experience requirements.

Validation: This outcome goal is measured by comparing data fields in an internal 

database that contains, among other data points, the date the OTI license application is 

accepted for processing and the date a licensing determination is made or the 

application process has been completed. The difference between these two dates is the 

length of time to render a decision on an OTI application accepted for processing. The 

database is maintained for daily case load management, and monthly and quarterly 

reporting purposes. The data is constantly under review and frequently updated.

75% 96%

Measure: Percentage of PVOs examined during the year that have the full financial 

coverage required by regulation to protect against loss from non-performance or 

95% 96%
FMC FISCAL YEAR 2019 Performance and Accountability Report  22

casualty.

Validation: This outcome goal is measured by comparing reported financial coverage 

amounts against required coverage amounts. Approximately 200 cruise vessels are 

registered in and monitored by the Commission’s Passenger Vessel (Cruise) Operator 

program. Operators covered by this program file semi-annual, monthly, and weekly 

unearned passenger revenue reports. This information is used to compare reported 

coverage against required coverage amounts.

Measure: Percentage of Commission issuances, orders and reports are available 

through the Commission’s website within 5 working days of receipt.

Validation: This outcome goal is measured by reviewing the workflow processes for 

posting documents to the Commission’s website docket activity logs. The date that 

each docket activity log is updated with new filings or issuances is compared to the date 

the document is filed with or issued by the Commission in a particular proceeding. The 

case logs are used on a daily basis by agency staff and by the public, and as such, any 

discrepancies are discovered and remedied quickly.

84% 99%

Measure: Percentage of ombuds matters and ADR services provided by the Office of 

Consumer Affairs and Dispute Resolution Services (CADRS) closed within six months.

Validation: This outcome goal is measured using data maintained by the Commission 

on each ombuds and ADR matter opened. Cases are opened upon the request of the 

public for assistance and are subject to the normal fluctuations in businesses and 

consumers seeking help from the Commission. Cases are closed upon resolution, 

voluntary termination by the parties, or when the CADRS mediator determines that 

particular issues prevent the possibility for successful negotiation.

61% 98%

Measure: Percentage of formal complaints or Commission initiated orders of 

investigation completed within two years of filing or Commission initiation.

Validation: This outcome goal is measured by using docket activity logs 

maintained by the Commission and used for docket management, and monthly 

and annual reporting purposes. The docket logs are used on a daily basis by 

agency staff and by the public, and as such, any discrepancies are discovered and 

remedied quickly.

Explanation:

For FY 2019, 43 percent of the 7 matters instituted in FY 2017 were completed 

well within the two-year measurement period. Four other cases were not 

concluded in that time frame. Two were heavily litigated, leading to more 

procedural complexity, discovery issues, and delay than is customary in 

Commission proceedings. Two other cases were delayed as they involved a legal 

issue for which the Commission undertook substantial consideration because of 

its potentially wide-ranging implications.

66% 43%
FMC FISCAL YEAR 2019 Performance and Accountability Report  23

TABLE 2: PERFORMANCE MEASURE TRENDS, FY 2015-2019

1 This measure was replaced by the first 2 new measures listed under Strategic Goal No. 1 in the Commission’s FY 2018-2022 Strategic Plan. For 

additional historical data on this performance measure, see published Commission Performance and Accountability Reports posted on its website. 2 To more accurately reflect the Commission’s performance in this area, this measure was replaced in FY 2017. For additional historical data on this 

performance measure, see published Commission Performance and Accountability Reports posted on its website.

Strategic Goal No. 1: Maintain a competitive and reliable international ocean transportation supply system.

FY 2015 FY2016 FY 2017 FY 2018 FY 2019

Measure: Percentage of FMC-filed agreements reviewed at Commission level which are modified through negotiation to mitigate 

anti-competitive effects.

TARGET N/A N/A N/A 50% 51%

ACTUAL N/A N/A N/A 100% 67%

TARGET MET/UNMET N/A N/A N/A MET MET

Measure: Percentage of agreement monitoring reports reviewed within 30 days of receipt to detect actionable information 

including market-distorting behavior.

TARGET N/A N/A N/A 65% 66%

ACTUAL N/A N/A N/A 89% 79%

TARGET MET/UNMET N/A N/A N/A MET MET

Measure: Percentage share of U.S. containerized cargo moving on other agreement parties’ vessels in major U.S. trades.1

TARGET 40% 40.5% 41% N/A N/A

ACTUAL 49% 51% 51% N/A N/A

TARGET MET/UNMET MET MET MET N/A N/A

Strategic Goal No. 2: Protect the public from unlawful, unfair, and deceptive ocean transportation practices.

Measure: Percentage of enforcement actions taken under the Shipping Act successfully resolved through favorable judgment, 

settlement, issuance of default judgment, or compliance letter or notice.

TARGET 77% 77.5% 77.5% 77.5% 77.5%

ACTUAL 83.4% 88.6% 82.8% 85.8% 97%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of decisions on completed OTI license applications rendered within 60 calendar days, facilitating lawful 

operation of OTIs with the appropriate character and experience requirements.

TARGET 75% 75% 75% 75% 75%

ACTUAL 72% 79.7% 95% 97% 96%

TARGET MET/UNMET UNMET MET MET MET MET

Measure: Percentage of PVOs examined during the year that have the full financial coverage required by regulation to protect 

against loss from non-performance or casualty.

TARGET 95% 95% 95% 95% 95%

ACTUAL 96% 96% 100% 99% 96%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of Commission issuances, orders, and reports available through the Commission’s website within 5 working 

days of receipt.

TARGET 78% 80% 82% 84% 84%

ACTUAL 92% 90% 95% 97% 99%

TARGET MET/UNMET MET MET MET MET MET

Measure: Percentage of Ombuds and ADR matters closed within 6 months of request for assistance.

TARGET N/A N/A 60% 60.5% 61%

ACTUAL N/A N/A 99% 97% 98%

TARGET MET/UNMET N/A N/A MET MET MET

Measure: Percentage of formal complaints or Commission-initiated orders of investigation completed within two years of filing or 

Commission initiation.

TARGET 58% 60% 62% 64% 66%

ACTUAL 90% 86% 79% 38% 43%

TARGET MET/UNMET MET MET MET UNMET UNMET

Measure: Number of cases opened and closed each fiscal year using Ombuds and ADR services assisting consumers to recover 

goods or funds.2

TARGET 825 825 N/A N/A N/A

ACTUAL 882 778 N/A N/A N/A

TARGET MET/UNMET MET UNMET N/A N/A N/A
PART THREE 

FINANCIAL INFORMATION 

Fiscal Year 2019
MESSAGE FROM THE CHIEF FINANCIAL OFFICER / 

MANAGING DIRECTOR

I am pleased to present the Financial Information section of this Performance 

and Accountability Report, and the FMC’s Financial Statements for Fiscal Year 

2019. For the 16th consecutive year, an independent auditor has rendered an 

unmodified opinion on the FMC’s financial statements, identifying no

deficiencies in internal control over financial reporting considered to be 

material weaknesses. Further, the auditor’s tests for compliance with selected 

provisions of applicable laws, regulations and contracts disclosed no instances 

of noncompliance for FY 2019 reportable under U.S. generally accepted 

government auditing standards. This demonstrates the Commission’s

continued record of strong fiscal stewardship on behalf of the American people and commitment to 

maintaining high standards for the financial management of resources entrusted to it. 

The financial statements and related notes, prepared in conformity with accounting principles 

generally accepted in the U.S., and requirements of OMB Circular A-136, Financial Reporting 

Requirements, revised June 28, 2019, fairly present the Commission’s financial position. 

The FMC’s financial condition is sound, internal controls are sufficient to ensure that its budget 

authority is not exceeded, and that funds are used efficiently and effectively. The following key 

accomplishments demonstrate the effectiveness and efficiency of the FMC’s acquisition and 

financial functions during Fiscal Year 2019:

• A continuous record of no material weaknesses, significant control deficiencies, or 

nonconformance with the FMFIA and other applicable laws and regulations;

• Collecting, in civil enforcement proceedings and user fees, more than $891,000;

• Continued focus on internal controls and risk management, as mandated by OMB Circular A123, providing budget information in concise, reliable, and understandable formats;

• Accurate, timely issuance of financial statements as required by the Accountability of Tax 

Dollars Act of 2002, prepared from, and fully supported by, the books and records of the FMC 

in accordance with Generally Accepted Accounting Principles (GAAP), standards approved by 

the Federal Accounting Standards Advisory Board (FASAB), and OMB Circular A-136; and

• Successful implementation of the Digital Accountability and Transparency Act of 2014 (DATA 

Act), which provides detailed information on the FMC’s careful stewardship of resources on the 

USASpending.gov website.

The FMC strives to exhibit exemplary financial management of its limited resources, and to enhance 

operational efficiency while protecting the interest of the American shipping public. I remain

confident that the high level of quality financial management will continue in the coming fiscal years. 

/s/

Karen V. Gregory

Chief Financial Officer/Managing Director

November 19, 2019
FMC FISCAL YEAR 2019 Performance and Accountability Report  26

PRINCIPAL FINANCIAL STATEMENTS

The principal financial statements presented include:

• Balance Sheet – Presents the combined amounts the agency had to use or distribute (assets) 

versus the amounts the agency owed (liabilities), and the difference between the two (net

position);

• Statement of Net Cost – Presents the annual cost of agency operations. The gross cost less any 

offsetting revenue is used to determine the net cost;

• Statement of Changes in Net Position – Reports the accounting activities that caused the change 

in net position during the reporting period;

• Statement of Budgetary Resources – Reports how budgetary resources were made available and 

the status of those resources at fiscal year-end; and

• Statement of Custodial Activity – Reports collections and their disposition by the agency on 

behalf of the Treasury General Fund. The FMC acts as custodian and does not have use of 

these funds. 

LIMITATIONS OF THE FINANCIAL STATEMENTS

The principal financial statements have been prepared to report the financial position and results of 

operations of the FMC, pursuant to the requirements of 31 U.S.C. § 3515(b). While the statements 

have been prepared from the books and records of the agency in accordance with GAAP for 

Federal entities and the formats prescribed by OMB, the statements are in addition to the financial 

reports used to monitor and control budgetary resources, which are prepared from the same books 

and records. The statements should be read with the understanding that they are for a component of 

the U.S. Government, a sovereign entity. Therefore, liabilities not covered by budgetary resources 

cannot be liquidated without the enactment of an appropriation, and the payment of all liabilities 

other than for contracts can be abrogated by the sovereign entity. Other limitations are included in 

the footnotes to the principal statements. The accompanying notes are an integral part of these 

statements. 

The Federal Maritime Commission’s financial statements were audited by Dembo Jones, P.C., under 

contract to the FMC’s Office of the Inspector General.
REPORT ON THE FINANCIAL STATEMENTS 

AUDIT OF THE FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2019 AND 2018
FMC FISCAL YEAR 2019| Performance and Accountability Report| 28

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 6, 2019

Office of Inspector General

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

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) 2019 and 2018 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 Dembo Jones, P.C. 

to: perform the audit of the FMC’s financial statements for the fiscal years ending September 30, 

2019 and 2018; 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, Dembo Jones 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 Dembo Jones’ 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. Dembo Jones is 

responsible for the attached auditors' report dated November 19, 2019 and the conclusions 

expressed in the report. However, our review disclosed no instances where Dembo Jones did not 

comply, in all material respects, with Generally Accepted Government Auditing Standards.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 29

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

assistance in helping Dembo Jones and the OIG meet the audit objectives.

Respectfully submitted,

/s/

Jon Hatfield

Inspector General

Attachment

cc: Office of the Managing Director 

Office of the General Counsel

Office of Budget and Finance
FMC FISCAL YEAR 2019| Performance and Accountability Report| 30

6010 Executive Blvd • Suite 900 Dembo Jones, P.C. 8850 Stanford Blvd • Suite 2000

Rockville, MD 20852 A Member of Allinial Global Columbia, MD 21045

P 301.770.5100 • F 301.770.5202 www.dembojones.com P 410.290.0770 • F 410.290.0774

INDEPENDENT AUDITORS' REPORT

Independent Auditor’s Report

To Chairman Khouri

Federal Maritime Commission

In our audits of the fiscal years 2019 and 2018 financial statements of Federal Maritime 

Commission (FMC) we found:

a) FMC’s financial statements as of and for the fiscal years ended September 30, 2019 and 

2018, are presented fairly, in all material respects, in accordance with U.S. generally 

accepted accounting principles;

b) no material weaknesses in internal control over financial reporting based on the limited 

procedures we performed; and 

c) no reportable noncompliance for fiscal year 2019 with provisions of applicable laws, 

regulations and contracts we tested. 

The following sections discuss in more detail (1) our report on the financial statements, which 

includes required supplementary information (RSI), such as “Management’s Discussion and 

Analysis”; (2) our report on internal control over financial reporting; (3) our report on 

compliance with laws, regulations and contracts; and (4) agency comments. 

Report on the Financial Statements 

In accordance with Generally Accepted Government Auditing Standards (GAGAS) and Office 

of Management and Budget (OMB) Bulletin No. 19-03, Audit Requirements for Federal 

Financial Statements, we have audited FMC’s financial statements. FMC’s financial statements 

comprise the balance sheets as of September 30, 2019, and 2018; the related statements of net 

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

ended; and the related notes to the financial statements.

We conducted our audits in accordance with U.S. generally accepted government auditing 

standards. We believe that the audit evidence we obtained is sufficient and appropriate to provide 

a basis for our audit opinions. 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 31

Dembo Jones, P.C.

Management’s Responsibility for the Financial Statements

FMC’s management is responsible for (1) the preparation and fair presentation of these financial 

statements in accordance with U.S. generally accepted accounting principles; (2) preparing, 

measuring, and presenting the RSI in accordance with U.S. generally accepted accounting 

principles; (3) preparing and presenting other information included in documents containing the 

audited financial statements and auditor’s report, and ensuring the consistency of that 

information with the audited financial statements and the RSI; and (4) maintaining effective 

internal control over financial reporting, including the design, implementation, and maintenance 

of internal control relevant to the preparation and fair presentation of 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. 

U.S. generally accepted government auditing standards require that we plan and perform the 

audit to obtain reasonable assurance about whether the financial statements are free from 

material misstatement. We are also responsible for applying certain limited procedures to RSI 

and other information included with the financial statements. 

An audit of financial statements 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 auditor’s 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 entity’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 entity’s internal 

control. Accordingly, we express no such opinion. An audit of financial statements also involves 

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

significant accounting estimates made by management, as well as evaluating the overall 

presentation of the financial statements. Our audits also included performing such other 

procedures as we considered necessary in the circumstances. 

Opinion on Financial Statements

In our opinion, FMC’s financial statements present fairly, in all material respects, FMC’s 

financial position as of September 30, 2019 and 2018, and its net costs of operations, changes in 

net position, budgetary resources and custodial activity for the fiscal years then ended in 

accordance with U.S. generally accepted accounting principles.

Other Matters

Required Supplementary Information 

U.S. generally accepted accounting principles issued by the Federal Accounting 

Standards Advisory Board (FASAB) require that the RSI be presented to supplement the 

financial statements. Although the RSI is not a part of the financial statements, FASAB 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 32

Dembo Jones, P.C.

considers this information to be an essential part of financial reporting for placing the 

financial statements in appropriate operational, economic, or historical context. We have 

applied certain limited procedures to the RSI in accordance with U.S. generally accepted 

government auditing standards, which consisted of inquiries of management about the 

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

management’s responses to the auditor’s inquiries, the financial statements, and other 

knowledge we obtained during the audit of the financial statements, in order to report 

omissions or material departures from FASAB guidelines, if any, identified by these 

limited procedures. We did not audit and we do not express an opinion or provide any 

assurance on the RSI because the limited procedures we applied do not provide sufficient 

evidence to express an opinion or provide any assurance. 

Other Information 

FMC’s other information contains a wide range of information, some of which is not 

directly related to the financial statements. This information is presented for purposes of 

additional analysis and is not a required part of the financial statements or the RSI. We 

read the other information included with the financial statements in order to identify 

material inconsistencies, if any, with the audited financial statements. Our audit was 

conducted for the purpose of forming an opinion on FMC’s financial statements. We did 

not audit and do not express an opinion or provide any assurance on the other 

information.

Report on Internal Control over Financial Reporting 

In connection with our audits of the FMC’s financial statements, we considered the FMC’s 

internal control over financial reporting, consistent with our auditor’s responsibility discussed 

below. We performed our procedures related to the FMC’s internal control over financial 

reporting in accordance with U.S. generally accepted government auditing standards. 

Management’s Responsibility

FMC management is responsible for maintaining effective internal control over financial 

reporting, including the design, implementation, and maintenance of internal control relevant to 

the preparation and fair presentation of financial statements that are free from material 

misstatement, whether due to fraud or error. 

Auditor’s Responsibility 

In planning and performing our audit of FMC’s financial statements as of and for the year ended 

September 30, 2019, in accordance with U.S. generally accepted government auditing standards, 

we considered the FMC’s internal control over financial reporting as a basis for designing 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 on the effectiveness of 

the FMC’s internal control over financial reporting. Accordingly, we do not express an opinion 

on the FMC’s internal control over financial reporting. We are required to report all deficiencies

that are considered significant deficiencies or material weaknesses. We did not consider all 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 33

Dembo Jones, P.C.

internal controls relevant to operating objectives, such as those controls relevant to preparing 

performance information and ensuring efficient operations. 

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel, the objectives of which are to provide reasonable 

assurance that (1) transactions are properly recorded, processed, and summarized to permit the 

preparation of financial statements in accordance with U.S. generally accepted accounting 

principles, and assets are safeguarded against loss from unauthorized acquisition, use, or 

disposition, and (2) transactions are executed in accordance with provisions of applicable laws, 

including those governing the use of budget authority, regulations and contracts, noncompliance 

with which could have a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements due to fraud or error. 

Results of Our Consideration of Internal Control over Financial Reporting 

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

designed to identify all deficiencies in internal control that might be material weaknesses and 

significant deficiencies or to express an opinion on the effectiveness of the FMC’s internal 

control over financial reporting. Given these limitations, during our audit, we did not identify 

any deficiencies in internal control over financial reporting that we consider to be material 

weaknesses. However, material weaknesses may exist that have not been identified. 

Intended Purpose of Report on Internal Control over Financial Reporting 

The purpose of this report is solely to describe the scope of our consideration of the FMC’s 

internal control over financial reporting and the results of our procedures, and not to provide an 

opinion on the effectiveness of the FMC’s internal control over financial reporting. This report is 

an integral part of an audit performed in accordance with U.S. generally accepted government 

auditing standards in considering internal control over financial reporting. Accordingly, this 

report on internal control over financial reporting is not suitable for any other purpose. 

Report on Compliance with Laws, Regulations and Contracts

In connection with our audits of FMC’s financial statements, we tested compliance with selected 

provisions of applicable laws, regulations and contracts, consistent with our auditor’s 

responsibility discussed below. We caution that noncompliance may occur and not be detected 

by these tests. We performed our tests of compliance in accordance with U.S. generally accepted 

government auditing standards.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 34

Dembo Jones, P.C.

Management’s Responsibility

FMC management is responsible for complying with laws, regulations and contracts applicable to 

FMC. 

Auditor’s Responsibility 

Our responsibility is to test compliance with selected provisions of applicable laws, regulations 

and contracts applicable to FMC that have a direct effect on the determination of material 

amounts and disclosures in FMC’s financial statements, and perform certain other limited 

procedures. Accordingly, we did not test compliance with all laws, regulations and contracts 

applicable to FMC. 

Results of Our Tests for Compliance with Laws, Regulations and Contracts 

Our tests for compliance with selected provisions of applicable laws, regulations and contracts 

disclosed no instances of noncompliance for fiscal year 2019 that would be reportable under U.S. 

generally accepted government auditing standards. However, the objective of our tests was not to 

provide an opinion on compliance with laws, regulations and contracts applicable to FMC. 

Accordingly, we do not express such an opinion. 

Intended Purpose of Report on Compliance with Laws, Regulations and Contracts

The purpose of this report is solely to describe the scope of our testing of compliance with 

selected provisions of applicable laws, regulations and contracts, and the results of that testing, 

and not to provide an opinion on compliance. This report is an integral part of an audit performed 

in accordance with U.S. generally accepted government auditing standards in considering 

compliance. Accordingly, this report on compliance with laws, regulations and contracts is not 

suitable for any other purpose.

Rockville, Maryland

November 15, 2019
FMC FISCAL YEAR 2019| Performance and Accountability Report| 35

APPENDIX A

FEDERAL MARITIME COMMISSION COMMENTS ON AUDIT REPORT

Federal Maritime Commission

Washington, DC 20573

 Office of the 

Managing Director

November 19, 2019

Donald K. Marshall, CPA

Dembo Jones, P.C.

6010 Executive Boulevard, Suite 900

Rockville, MD 20852

Dear Mr. Marshall:

I have reviewed the financial statements audit report for the Federal Maritime Commission for fiscal 

year 2019. I concur with the audit report’s findings that the financial statements fairly present the 

Commission’s financial position during the fiscal year ending September 30, 2019, and that the 

financial statements are in conformity with U.S. Generally Accepted Accounting Principles; that the 

FMC has maintained, in all material respects, effective internal control over financial reporting; and 

that there were no instances of reportable noncompliance with laws and regulations tested by the 

auditors. 

The Commission appreciates Dembo Jones’ work over the past fiscal year.

Sincerely,

/s/

Karen V. Gregory

Chief Financial Officer / Managing Director
FMC FISCAL YEAR 2019| Performance and Accountability Report| 36

APPENDIX B

FEDERAL MARITIME COMMISSION FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

Table of Contents 

Balance Sheet....................................................................................................................................................37

Statement of Net Cost.....................................................................................................................................38

Statement of Changes in Net position..........................................................................................................39

Statement of Budgetary Resources................................................................................................................40

Statement of Custodial Activity .....................................................................................................................40

Notes to the Financial Statements...................................................................................................41

The accompanying notes are an integral part of these financial statements.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 37

2019 2018

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 7,250,803 $ 6,234,624

Total Intragovernmental 7,250,803 6,234,624

Accounts Receivable, Net (Note 3) 8,708 10,462

Property, Equipment, and Software, Net (Note 4) 43,109 106,367

Total Assets $ 7,302,620 $ 6,351,453

Liabilities:

Intragovernmental

Accounts Payable $ 3,026 $ 28,145

Other (Note 6) 168,237 146,929

Total Intragovernmental 171,263 175,074

Accounts Payable 284,477 76,962

Federal Employee and Veterans' Benefits (Note 5) 2,022 3,334

Other (Note 6) 2,115,779 1,956,339

Total Liabilities $ 2,573,541 $ 2,211,709

Net Position:

Unexpended Appropriations - Other Funds $ 6,130,844 $ 5,326,391

Cumulative Results of Operations - Other Funds (1,401,765) (1,186,647)

Total Net Position $ 4,729,079 $ 4,139,744

Total Liabilities and Net Position $ 7,302,620 $ 6,351,453

BALANCE SHEET

AS OF SEPTEMBER 30, 2019 AND 2018

(In Dollars)

FEDERAL MARITIME COMMISSION
FMC FISCAL YEAR 2019| Performance and Accountability Report| 38

2019 2018

Gross Program Costs:

Operational and Administrative

Gross Costs $ 27,603,806 $ 20,632,539

Less: Earned Revenue (84,364) -

Net Program Costs $ 27,519,442 $ 20,632,539

Office of Inspector General

Gross Costs $ 372,938 $ 394,371

Less: Earned Revenue - -

Net Program Costs $ 372,938 $ 394,371

Formal Proceedings

Gross Costs $ - $ 7,077,950

Less: Earned Revenue - -

Net Program Costs $ - $ 7,077,950

Office of Equal Employment Opportunity

Gross Costs $ - $ 167,957

Less: Earned Revenue - (58,034)

Net Program Costs $ - $ 109,923

Net Cost of Operations $ 27,892,380 $ 28,214,783

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)
FMC FISCAL YEAR 2019| Performance and Accountability Report| 39

2019 2018

All Other Funds All Other Funds

Unexpended Appropriations:

Beginning Balances $ 5,326,391 $ 4,483,892

Budgetary Financing Sources:

Appropriations Received 27,490,000 27,490,000

Other Adjustments (328,969) (55,651)

Appropriations Used (26,356,578) (26,591,850)

Total Budgetary Financing Sources 804,453 842,499

Total Unexpended Appropriations $ 6,130,844 $ 5,326,391

Cumulative Results of Operations:

Beginning Balances $ (1,186,647) $ (878,299)

Budgetary Financing Sources:

Other Adjustments - -

Appropriations Used 26,356,578 26,591,850

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 9) 1,320,684 1,314,585

Total Financing Sources 27,677,262 27,906,435

Net Cost of Operations (27,892,380) (28,214,783)

Net Change (215,118) (308,348)

Cumulative Results of Operations $ (1,401,765) $ (1,186,647)

Net Position $ 4,729,079 $ 4,139,744

FEDERAL MARITIME COMMISSION

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)
FMC FISCAL YEAR 2019| Performance and Accountability Report| 40

2019 2018

Budgetary Resources:

Unobligated balance from prior year budget authority, net $ 1,125,368 $ 460,199

Appropriations 27,490,000 27,490,000

Borrowing authority - -

Contract Authority - -

Spending authority from offsetting collections 84,364 58,034

Total Budgetary Resources $ 28,699,732 $ 28,008,233

Memorandum (non-add) Entries:

Net adjustments to unobligated balance brought forward, Oct. 1 $ (4,874,071) $ (4,744,348)

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 11) $ 27,339,179 $ 27,138,443

Unobligated balance, end of year:

 Apportioned, unexpired account (Note 2) 344,043 668,828

Expired unobligated balance, end of year (Note 2) 1,016,510 200,962

Unobligated balance, end of year (total) 1,360,553 869,790

Total Budgetary Resources $ 28,699,732 $ 28,008,233

Outlays, net:

Outlays, net, (total) 26,144,852 26,813,862

Distributed Offsetting Receipts (233,789) (251,562)

Agency outlays, net $ 25,911,063 $ 26,562,300

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)

2019 2018

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 891,166 $ 1,354,016

Total Cash Collections (Note 13) 891,166 1,354,016

Accrual Adjustments 170 (337)

Total Custodial Revenue 891,336 1,353,679

Disposition of Collections:

Transferred to Others (by Recipient) 891,166 1,354,016

Increase/(Decrease) in Amounts Yet to be Transferred (23) (337)

Retained by the Reporting Entity 193 -

Total Disposition of Collections 891,336 1,353,679

Net Custodial Activity $ - $ -

(In Dollars)

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
FMC FISCAL YEAR 2019| Performance and Accountability Report| 41

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity

The Federal Maritime Commission (FMC or 

Commission) was established as an independent 

regulatory agency on August 12, 1961. The FMC 

is responsible for the regulation of oceanborne 

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 (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 inter-mediaries (non-vesseloperating 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 com-mon carriers’ 

privately published tariff systems for accessibility 

and accuracy, as required by OSRA.

The FMC 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 

non-recurring activity, such as fines, penalties, fees 

and other miscellaneous receipts for services and 

benefits.

The FMC makes custodial collections and holds 

custodial receivables that are non-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.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 42

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 Commission. The 

Statement of Net Cost presents the Commission’s 

operating results; the Statement of Changes in Net 

Position displays the changes in the Commission’s 

equity accounts. The Statement of Budgetary 

Resources presents the sources, status, and uses of 

the Commission’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 otherwise, all amounts are presented in 

dollars.

C. Basis of Accounting

Transactions are recorded on both an accrual 

accounting basis and a budgetary basis. Under the 

accrual method, revenues are recognized when 

earned, and expenses are recognized when a 

liability is incurred, without regard to receipt or 

payment of cash. Budgetary accounting facilitates 

compliance with legal requirements on the use of 

federal funds.

D. Fund Balance with Treasury

Fund Balance with Treasury is the aggregate 

amount of the FMC’s funds with Treasury in 

expenditure and receipt accounts. Appropriated 

funds recorded in expenditure accounts are 

available to pay current liabilities and finance 

authorized purchases. 

E. Accounts Receivable

Accounts receivable consists of amounts owed to 

FMC by other Federal agencies and the general 

public. Amounts due from Federal agencies are 

considered fully collectible. An allowance for uncollectible accounts receivable from the public is 

established when, based upon a review of 

outstanding accounts and the failure of all 

collection efforts, management determines that 

collection is unlikely to occur considering the 

debtor’s ability to pay.

F. Property, Equipment, and Software

Property, equipment and software represent 

furniture, fixtures, equipment, and information 

technology hardware and software which are 

recorded at original acquisition cost and are 

depreciated or amortized using the straight-line 

method over their estimated useful lives. Major 

alterations and renovations are capitalized, while 

maintenance and repair costs are expensed as 

incurred. FMC’s capitalization threshold is 

$25,000 for individual purchases. Property, 

equipment, and software acquisitions that do 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 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 43

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. 

Intra-governmental 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 of accounts 

payable and accrued payroll and benefits. 

Accounts payable represent amounts owed to 

another entity for goods ordered and received and 

for services rendered except for employees. 

Accrued payroll and benefits represent payroll 

costs earned by employees during the fiscal year 

which are not paid until the next fiscal year.

Liabilities not covered by budgetary resources are 

liabilities that are not funded by any current 

appropriation or other funding source. These 

liabilities consist of accrued annual leave, actuarial 

Federal Employees’ Compensation Act (FECA), 

and the amounts due to Treasury for collection and 

accounts receivable of civil penalties.

I. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the 

accrual is reduced as leave is taken. The balance 

in the accrued leave account is adjusted to reflect 

current pay rates. Liabilities associated with other 

types of vested leave, including compensatory, 

restored leave, and sick leave in certain 

circumstances, are accrued at year-end, based on 

latest pay rates and unused hours of leave. 

Funding will be obtained from future financing 

sources to the extent that current or prior year 

appropriations are not available to fund annual and 

other types of vested leave earned but not taken. 

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)-covered employees.

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 

with-out 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 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 participate in 

CSRS are beneficiaries of FMC matching 

contribution, equal to 7% of pay, distributed to 

their annuity account in the Civil Service 

Retirement and Disability Fund.

Prior to December 31, 1983, all employees were 

covered under the CSRS program. From January 

1, 1984 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 1% of pay and FMC 

matches any employee contribution up to an 

additional 4% percent of pay. For FERS 

participants, FMC also contributes the employer’s 

matching share of Social Security.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 44

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.

The 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. 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 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

Preparation of the accompanying financial 

statements in accordance with generally accepted 

accounting principles requires management to 

make certain estimates and assumptions that affect 

the re-ported amounts of assets, liabilities, 

revenues, and expenses. Actual results could differ 

from those estimates. 

N. Imputed Costs/Financing Sources

Federal Government entities often receive goods 

and services from other Federal Government 

entities without reimbursing the providing entity 

for all the related costs. In addition, Federal 

Government entities also incur costs that are paid 

in total or in part by other entities. An imputed 

financing source is recognized by the receiving 

entity for costs that are paid by other entities. 

FMC recognized imputed costs and financing 

sources in fiscal years 2019 and 2018 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. The FMC discloses 

contingent liabilities in the notes to the financial 

statements when the conditions for liability 

recognition are not met or when a loss from the 

outcome of future events is more than remote. In 

some cases, once losses are certain, payments may 

be made from the Judgment Fund maintained by 

the U.S. Treasury rather than from the amounts 

appropriated to FMC for agency operations. 

Payments from the Judgment Fund are recorded as 

an “Other Financing Source” when made.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 45

NOTE 2. FUND BALANCE WITH TREASURY 

Fund balance with Treasury account balances as of September 30, 2019 and 2018, were as follows:

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

Treasury accounts.

The available unobligated fund balances represent the current-period amount available for obligation or 

commitment. At the start of the next fiscal year, this amount will become part of the unavailable balance 

as described in the following paragraph.

The unavailable unobligated fund balances represent the amount of appropriations for which the period of 

availability for obligation has expired. These balances are available for upward adjustments of 

obligations incurred only during the period for which the appropriation was available for obligation or for 

paying claims attributable to the appropriations.

The obligated balance not yet disbursed includes accounts payable, accrued expenses, and undelivered 

orders that have reduced unexpended appropriations but have not yet decreased the fund balance on hand 

(see also Note 12).

NOTE 3. ACCOUNTS RECEIVABLE 

Accounts receivable balances as of September 30, 2019 and 2018, were as follows:

The accounts receivable is primarily made up of services provided to the public. Historical experience 

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

accounts as of September 30, 2019 and 2018.

2019 2018

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 344,043 $ 668,828 

 Unavailable 1,016,510 200,962 

Obligated Balance Not Yet Disbursed 5,890,250 5,364,834 

Total $ 7,250,803 $ 6,234,624 

2019 2018

With the Public

Miscellaneous Accounts Receivable $ 8,539 $ 10,320

Interest Receivable 24 12

Penalties and Fines Receivable 145 130

Total Accounts Receivable $ 8,708 $ 10,462
FMC FISCAL YEAR 2019| Performance and Accountability Report| 46

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE 

Schedule of Property, Equipment, and Software as of September 30, 2019:

Schedule of Property, Equipment, and Software as of September 30, 2018:

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

The liabilities for FMC as of September 30, 2019 and 2018, 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. 

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual workers 

compensation claims and unemployment benefits paid on FMC 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. 

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 316,289 273,180 43,109

Total $ 541,289 $ 498,180 $ 43,109

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

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

Furniture & Equipment 316,289 209,922 106,367

Total $ 541,289 $ 434,922 $ 106,367

2019 2018

Intragovernmental – FECA $ - $ 474

Intragovernmental – Unemployment Insurance 822 -

Unfunded Leave 1,448,743 1,297,843

Actuarial FECA 2,022 3,334

Other Liabilities 25 25

Total Liabilities Not Covered by Budgetary Resources $ 1,451,612 $ 1,301,676

Total Liabilities Covered by Budgetary Resources 1,119,930 908,210

Total Liabilities Not Requiring Budgetary Resources 1,999 1,823

Total Liabilities $ 2,573,541 $ 2,211,709
FMC FISCAL YEAR 2019| Performance and Accountability Report| 47

NOTE 6. OTHER LIABILITIES 

Other liabilities account balances as of September 30, 2019 were as follows:

Other liabilities account balances as of September 30, 2018 were as follows:

Current Non Current Total

Intragovernmental

Unemployment Insurance Liability $ 822 $ - $ 822

Payroll Taxes Payable 165,416 - 165,416

 Custodial Liability 1,999 - 1,999

Total Intragovernmental Other Liabilities $ 168,237 $ - $ 168,237

With the Public

 Payroll Taxes Payable $ 24,076 $ - $ 24,076

 Accrued Funded Payroll and Leave 642,935 - 642,935

 Unfunded Leave 1,448,743 - 1,448,743

 Other liability with Related Budgetary

 Obligations - 25 25

Total Public Other Liabilities $ 2,115,754 $ 25 $ 2,115,779

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 474 $ 474

Payroll Taxes Payable 144,632 - 144,632

 Custodial Liability 1,823 - 1,823

Total Intragovernmental Other Liabilities $ 146,455 $ 474 $ 146,929

With the Public

 Payroll Taxes Payable $ 22,406 $ - $ 22,406

 Accrued Funded Payroll and Leave 636,064 - 636,064

 Unfunded Leave 1,297,844 - 1,297,844

 Other liability with Related Budgetary

 Obligations - 25 25

Total Public Other Liabilities $ 1,956,314 $ 25 $ 1,956,339
FMC FISCAL YEAR 2019| Performance and Accountability Report| 48

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 2019 and 

2018 were $3,334,306 and $3,491,970, respectively. The lease locations and terms are listed below:

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

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

NOTE 8. COMMITMENTS AND CONTINGENCIES 

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 no knowledge of any lawsuits/investigations in 

which payment is deemed probable.

NOTE 9. IMPUTED FINANCING SOURCES 

FMC recognizes as imputed financing the costs of future benefits which include health benefits, life 

insurance, pension and post-retirement benefit expenses for current employees. The assets and liabilities 

associated with such benefits are the responsibility of the administering agency, OPM. For the years 

ended September 30, 2018 and 2017 imputed financing was as follows:

Location Term Lease Expiration Date

Hollywood, FL 10 years 5/31/2020

San Pedro, CA 10 years 9/30/2021

Tacoma, WA 10 years 6/30/2022

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 3/15/2024

Houston, TX 15 years 10/1/2033

Fiscal Year Totals

2020 $ 3,237,920 

2021 3,232,888 

2022 3,236,683 

2023 325,118 

2024 37,921 

Thereafter 129,765 

Total Future Minimum Payments $ 10,200,295 

2019 2018

Office of Personnel Management $ 1,320,684 $ 1,314,585 

Total Imputed Financing Sources $ 1,320,684 $ 1,314,585 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 49

NOTE 10. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT 

The President’s Budget that will include fiscal year 2019 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2020 and can be 

found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2020 Budget of the United States 

Government, with the "Actual" column completed for 2018, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

In Millions

NOTE 11. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

Obligations incurred and reported in the Statement of Budgetary Resources in 2019 and 2018 consisted of 

the following:

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

As of September 30, 2019, budgetary resources obligated for undelivered orders were as follows:

As of September 30, 2018, budgetary resources obligated for undelivered orders were as follows:

Budgetary Obligations Net

FY2018 Resources Incurred Outlays

Statement of Budgetary Resources $ 28 $ 27 $ 27

Difference - Due to Rounding $ (1) $ - $ -

Budget of the U.S. Government $ 27 $ 27 $ 27

2019 2018

Direct Obligations, Category A $ 27,254,815 $ 27,080,409

Reimbursable Obligations, Category A 84,364 58,034

Total Obligations Incurred $ 27,339,179 $ 27,138,443

Federal Non-Federal Total

Unpaid Undelivered Orders $ 1,222,383 $ 3,547,908 $ 4,770,291

Total Undelivered Orders $ 1,222,383 $ 3,547,908 $ 4,770,291

Federal Non-Federal Total

Unpaid Undelivered Orders $ 1,360,299 $ 3,096,302 $ 4,456,601

Total Undelivered Orders $ 1,360,299 $ 3,096,302 $ 4,456,601
FMC FISCAL YEAR 2019| Performance and Accountability Report| 50

NOTE 13. CUSTODIAL ACTIVITY 

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

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

as custodial revenue 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 

component of the custodial revenue is general proprietary receipts (User Fees) for the application of 

licenses issued to qualified Ocean Transportation Intermediaries (OTIs) in the U.S., FMC reviews 

petitions, status changes and special permission fees. FMC believes that all fines, penalties, administrative 

fees and user fees will be collected in full. There are no material uncollectible accounts as of September 

30, 2019 and 2018.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows (note: amounts may not total due to rounding):

2019 2018

Fines, Penalties, and Forfeitures $ 660,125 $ 1,108,194

General Fund Proprietary Receipts (User/Admin Fees) 233,770 251,524

Refunds of Proprietary Receipts (User fees) (2,747) (5,740)

Interest 19 38

Total Custodial Collections $ 891,166 $ 1,354,016
FMC FISCAL YEAR 2019| Performance and Accountability Report| 51

NOTE 14. RECONCILIATION OF NET COST TO NET OUTLAYS

The reconciliation of net outlays, presented on a budgetary basis, and the net cost, presented on an accrual 

basis, provides an explanation of the relationship between budgetary and financial accounting 

information. 

Intragovernmental With the Public Total 

Net Operating Cost (SNC) $ 9,855,902 $18,036,478 $27,892,380

Property, plant, and equipment depreciation (63,258) (63,258)

(Increase)/Decrease in assets not affecting Budget Outlays:

Accounts receivable - (1,755) (1,755)

(Increase)/Decrease in liabilities not affecting Budget Outlays:

Accounts payable 25,118 (207,516) (182,398)

Salaries and benefits (20,785) (8,543) (29,328)

Other liabilities (524) (149,588) (150,112)

Other financing sources:

Imputed federal employee retirement benefit costs (1,320,684) (1,320,684)

$ (1,316,875) $ (430,660) $ (1,747,535)

Other 657,354 (891,136) (233,782)

Net Outlays (Calculated Total) $ 9,196,381 $16,714,682 $25,911,063

Related Amounts on the Statement of Budgetary Resources

Outlays, net, (total) (SBR 4190) 26,144,852

Distributed offsetting receipts (SBR 4200) (233,789)

Outlays, Net (SBR 4210) $25,911,063

Total Components of Net Operating Cost Not Part of the Budget 

Outlays

BUDGET AND ACCRUAL RECONCILIATION

FOR THE YEAR ENDED SEPTEMBER 30, 2019

(In Dollars)

Components of Net Operating Cost Not Part of the Budgetary 

Outlays 

Components of the Budget Outlays That Are Not Part of Net 

Operating Cost
FMC FISCAL YEAR 2019| Performance and Accountability Report| 52

PART FOUR 

OTHER INFORMATION 

Fiscal Year 2019
FMC FISCAL YEAR 2019| Performance and Accountability Report| 53

INSPECTOR GENERAL’S STATEMENT ON PRIOR MANAGEMENT 

AND PERFORMANCE CHALLENGES

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 18, 2019

Office of Inspector General

TO: Chairman Khouri

Commissioner Dye 

Commissioner Maffei

Commissioner Sola

FROM: Inspector General 

SUBJECT: Inspector General’s Statement on the Federal Maritime Commission’s Prior 

Management and Performance Challenges

The Reports Consolidation Act of 2000 (Public Law 106-531) requires inspectors general to 

provide a summary and assessment of the most serious management and performance challenges 

facing Federal agencies, and their progress in addressing these challenges. The attached document 

responds to the requirements and provides the annual statement to be included in the Federal

Maritime Commission’s (FMC) Performance and Accountability Report (PAR) for fiscal year (FY) 

2019. 

This year’s Office of Inspector General (OIG) report removes information technology (IT) 

security as a management challenge due to the OIG’s FY 2019 audit results of the FMC’s IT 

security program, and continued progress by the agency to ensure an effective IT security program. 

In addition, this report provides an update on the agency’s continued focus and positive results on 

workforce satisfaction and engagement, an issue the OIG no longer considers a challenge for the 

agency, but was a management challenge during FYs 2013-2015. 

The Reports Consolidation Act of 2000 permits agency comment on the inspector general’s 

statements. Agency comments, if applicable, are to be included in the final version of the FMC PAR 

that is due by November 19, 2019. 

/s/

Jon Hatfield

Attachment

Cc: Karen V. Gregory, Managing Director

Peter J. King, Deputy Managing Director

Kathie L. Keys, Special Assistant to the Managing Director
FMC FISCAL YEAR 2019| Performance and Accountability Report| 54

Office of Inspector General (OIG)

Fiscal Year 2019 Management Challenge Report

Information Technology Security – Prior Years’ Challenge

This year, the OIG has removed information technology (IT) security as an agency 

management challenge based on the OIG’s fiscal year (FY) 2019 audit results of the agency’s 

IT security, and because of continued agency progress over the last several years in this area. 

The OIG has reported IT security as an FMC management challenge for the last several years 

primarily because IT security has remained a government-wide challenge due to the evolving 

and growing threats to government information systems. While the government-wide IT security 

challenge continues to exist, due to improvements in the FMC’s program, the OIG has removed 

IT security as an FMC management challenge for FY 2019. Risks to information and 

communication systems include insider threats from disaffected or careless employees and 

business partners; escalating and emerging threats from around the globe; the ease of obtaining 

and using hacking tools; the steady advance in the sophistication of attack technology; and the 

emergence of new and more destructive attacks.

The Federal Information Security Modernization Act of 2014 (FISMA) establishes 

information security program and evaluation requirements for Federal agencies in the executive 

branch, including the FMC. Each year, the FMC OIG performs an independent audit or 

evaluation of the information security program and practices of the agency. The results of the 

evaluation are reported annually to the OMB; selected congressional committees; the 

Comptroller General; and the FMC’s Commission and management. 

To highlight the importance of IT security, the Government Accountability Office (GAO) 

has designated information security as a government-wide high-risk area since 1997. This highrisk area was expanded in 2003 to include the protection of critical cyber infrastructure and, in 

2015, to include protecting the privacy of personally identifiable information (PII). In addition 

to GAO reporting, the Office of Management and Budget’s (OMB) FISMA FY 2018 Annual 

Report to Congress highlights the cybersecurity threats facing the Federal government and the 

need for vigilance to protect the country’s data and digital infrastructure. Specifically, Federal 

agencies reported 31,107 cybersecurity incidents in FY 2018; this is a 12% decrease over the 35,277 

incidents that agencies reported in FY 2017.

The OIG plans to issue the final FY 2019 FISMA audit report by October 31, 2019. The 

anticipated results of the OIG audit are to include three new audit findings and three 

corresponding recommendations; of the three findings, one was remediated by the end of the FY 

and is now considered closed. In addition, the final OIG audit report is expected to conclude that 

all six of the outstanding recommendations from prior years have been implemented by the 

agency and will be closed. The FMC is demonstrating a commitment to maintain an effective 

information security program, and the FY 2019 FISMA audit results demonstrate this 

commitment. The OIG looks for the agency to continue their focus on maintaining and 

enhancing security controls based on risk and evolving threats.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 55

Update - Workplace Satisfaction and Employee Engagement: Prior Years’ Challenge

Previously an FMC challenge, the OIG identified workplace satisfaction and employee 

engagement as an FMC management challenge for the first time in 2013, and again in 2014 and 

2015, due to low survey results as reported by the Office of Personnel Management (OPM) in 

their annual Federal Employee Viewpoint Survey (FEVS). In December 2012, the Partnership 

for Public Service (PPS), a nonprofit organization that works to revitalize the Federal 

government, released its rankings for the Best Places to Work in the Federal Government. The 

December 2012 report ranked the FMC the second lowest of small agencies; the FMC ranked the 

third lowest of small agencies in both the 2013 and 2014 rankings. Several years later, during 

2017, the FMC was recognized by the PPS as the Most Improved Small Agency Over the Last 5 

Years during the annual Best Places to Work ceremony.

Workplace satisfaction and employee engagement, removed by the OIG as an agency 

challenge in fiscal year 2016, is defined as an employee’s sense of purpose: this is evident in 

their display of dedication, persistence, and effort in their work or overall commitment to their 

organization and its mission. OPM conducts the annual FEVS to provide government 

employees, including the FMC, the opportunity to candidly, and anonymously, share their 

perceptions of their work experiences, their agency, and their leaders. An engaged and satisfied 

workforce is central to effectively achieving agency goals, retaining staff, and recruitment of 

new staff. As a result, due to the importance, the OIG continues to monitor and report on the 

FMC’s progress to improve workplace satisfaction and employee engagement.

Continued Positive Results

The purpose of inclusion in this year’s report is to provide an update on the agency’s 

continued progress in the area of workplace satisfaction and employee engagement, a previous 

agency challenge. 

Engagement Index Trends

The engagement index is a measure of the employees’ sense of purpose, the display of 

dedication, persistence, and effort in their work or overall commitment to their organization and 

its mission. The index is comprised of numerous FEVS questions in the following sub‐factors: 

leaders lead ‐ reflects the employees’ perceptions of the integrity of leadership, as well as 

leadership behaviors such as communication and workforce motivation; supervisors ‐ reflects the 

interpersonal relationship between worker and supervisor, including trust, respect, and support; 

and intrinsic work experience ‐ reflects the employees’ feelings of motivation and competency 

relating to their role in the workplace.

2014 2015 2016 2017 2018

FMC 42 56.8 59.3 67.5 74.4

Index

Small 

Agencies

Combined 62.7 63.8 66.7 70.4 66.1

Difference - 20.7 - 7 - 7.4 - 2.9 + 8.3
FMC FISCAL YEAR 2019| Performance and Accountability Report| 56

Best Places to Work in the Federal Government – Small Agency Rankings

The Best Places to Work in the Federal Government rankings, produced by 

the Partnership for Public Service and Boston Consulting Group, offer the most comprehensive 

assessment of how Federal employees view their jobs and workplaces. The rankings provide 

employee perspectives on leadership, pay, innovation, work–life balance and a range of other issues. 

The majority of the data used to develop the rankings is collected by the OPM through its FEVS. The 

Best Places to Work index is calculated based on the percentage of positive responses to three 

workplace satisfaction questions and is weighted according to a proprietary formula. The three 

questions are: 

(1) I recommend my organization as a good place to work. 

(2) Considering everything, how satisfied are you with your job?

(3) Considering everything, how satisfied are you with your organization?

 2014 2016 2018

FMC 28th of 30 23rd of 30 9th of 29

Rankings

OPM acknowledges there is no quick-fix nor one-size-fits-all solution to creating an 

engaged workforce; promoting employee engagement is a long-term and on-going process that 

requires continued interactions and efforts over time to improve and maintain. For the last 

several years, the FMC has maintained several initiatives that focus on workforce satisfaction 

and employee engagement. Among these are improved communication at all-levels of the 

organization; a workforce improvement plan developed by the senior management, with input 

from all employees, and updated annually; an annual employee suggestion team to solicit, 

evaluate, and recommend workplace improvements; among other initiatives. The benefits of an 

engaged and satisfied workforce are many, among these are better employment recruitment and 

retention; employee performance; organization reputation; and the ability of the agency to meet 

its mission requirements.

COMMENTS ON INSPECTOR GENERAL’S STATEMENT 

The Commission values the Inspector General’s annual audits and reviews, and the essential role

this plays in keeping the Commission up-to-date on the significant risks and challenges facing the 

Federal government as a whole. 
FMC FISCAL YEAR 2019| Performance and Accountability Report| 57

FINANCIAL STATEMENT AUDIT SUMMARY

Table 1 is a summary of the results of the independent audit of the FMC’s financial statements by 

the agency’s auditors in connection with the FY 2019 audit.

MANAGEMENT ASSURANCES SUMMARY

Table 2 is a summary of management assurances related to the effectiveness of internal control over 

the FMC’s financial reporting and operations, and its conformance with financial management 

system requirements under Sections 2 and 4, respectively, of the FMFIA. This table also 

summarizes compliance with the FFMIA, which is not applicable to the Commission.

Table 1. Summary of Financial Statement Audit

Audit Opinion Unmodified

Restatement No

Material Weaknesses Beginning balance New Resolved Consolidated Ending Balance

None n/a n/a n/a n/a n/a

Total Material Weaknesses None None n/a n/a None

Table 2. Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses None n/a n/a n/a n/a None

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of weakness] None n/a n/a n/a n/a None

Total Material Weaknesses None n/a n/a n/a n/a None

Compliance with Federal Financial Management System Requirements (FMFIA § 4)

Statement of Assurance Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

[name of noncompliance] None n/a n/a n/a n/a None

Total noncompliances None n/a n/a n/a n/a None

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. Federal Financial Management 

System Requirements

FFMIA does not apply to the FMC n/a

2. Applicable Federal Accounting 

Standards

FFMIA does not apply to the FMC n/a

3. USSGL at Transaction Level FFMIA does not apply to the FMC n/a
FMC FISCAL YEAR 2019| Performance and Accountability Report| 58

IMPROPER PAYMENTS INFORMATION ACT

NARRATIVE SUMMARY OF IMPLEMENTATION EFFORTS FOR FY 2019

The FMC has fully complied with the requirements of OMB Circular A-123 (Appendix C), 

Requirements for Payment Integrity Improvement, which implements the provisions of the Improper Payments 

Information Act of 2002, as amended by the Improper Payments Elimination and Recovery Act of 2010 

(IPERA), and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA), and 

directs federal agencies to review and assess all programs and activities they administer, and further

identify those deemed to be susceptible to significant improper payments. 

In 2017, the FMC completed a risk assessment analysis in accordance with guidance received from 

OMB in Circular A-123, which defines significant erroneous payments to be annual erroneous 

payments in a program that exceed both $10 million and 1.5 percent or $100 million of total annual 

disbursements. The assessment considered certain risk factors that would likely cause improper 

payments. It covered all disbursement programs including travel, payroll, intragovernmental 

transactions, and vendor payments. It was determined that the FMC does not meet the baseline 

criteria (both 1.5 percent and $10,000,000 of the total program) to trigger a quantitative risk 

assessment as stated in OMB Circular A-123 (Appendix C). 

Classification of Payment 

Activities: 

Fiscal Year 2019

Appropriation Baseline 

Reported to Congress

Improper 

Payments 

Identified in 

PAR

Improper 

Payments 

Percent of TP

Significant Improper 

Payment Test (1) both 

1.5% and $10M of TP

Significant 

Improper 

Payment Test (2) 

$100M/Program

Payroll $18,419,268 $0.00 0.0000% No No

Travel $163,511 $0.00 0.0000% No No

Adminstrative Expenses:

 Government Vendors* $4,848,075 $0.00 0.0000% No No

 Commercial Vendors $3,715,103 $0.00 0.0000% No No

Total $27,145,957 $0.00 0.0000%

* Government vendors includes rental payments to GSA.

Federal Maritime Commission IPERIA Risk Data 2019

The FMC’s authorized budget for FY 2019 was $27,490,000. Obligations against the FMC’s 

appropriation totaled $27,145,957, representing 98.8 percent of the funding level. The largest annual 

disbursements were related to salaries and benefits and represent 67.0 percent of the annual budget. 

The next largest allocation of funds, 31.2 percent, was for administrative expenses which include the 

General Services Administration (GSA) rent, utilities, communications, and IT services and 

equipment. Based on the results of testing a sample of transactions, our assessment of risk factors, 

and our reliance on internal controls, including an appropriate segregation of duties, performed at 

both the service provider level and FMC, we have determined that no FMC programs or activities 

were susceptible to significant erroneous payments in FY 2019. The following chart denotes the 

FMC’s qualitative risk analysis for FY 2019.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 59

FMC $27,145,957 Payroll $18,419,268 Adminsitrative* $8,316,195 Travel - CBA $163,511 Purchase Card* $246,984 

Risk (High, Med, or Low)

Criteria

Is the program new?

Is the process to determine correct 

payment amounts complex?

Is there a high volume of payments?

Are payments or eligibility decisions 

made outside the agency (i.e., State or 

local governments or regional Federal 

field office)?

Have there been recent changes in 

program funding, authorities, practices 

or procedures?

Are the personnel responsible for 

making program eligibility 

determinations or certifying that 

payments are accurate inexperienced 

or lacking in training?

Are there any programs that pose an 

inherent risk due to the nature of the 

program?

Are there significant deficiencies in 

the audit reports of the agency that 

might hinder accurate payment 

certification?

Are there any indicators from prior 

years' improper payment work that 

would indicate potential risk?

Score

Risk: Scoring:

Low 8 - 12 No 1

Medium 13 - 20 Somewhat 2

High 21 - 24 Yes 3

* Total administrative costs are $8,563,179 (administrative + purchase cards). 

1 1

Fiscal Year 2019 Systematic Method: Qualitative Risk Assessment Questionnaire

Total Annual 

Expenditures

Annual 

Expenditures

Annual 

Expenditures

Annual 

Expenditures Program Activity Activity Activity

Low Low Med

1.00 1 1

No (1), Somewhat (2), Yes (3) No (1), Somewhat (2), Yes (3) No (1), Somewhat (2), Yes (3)

1.00 1 1

2.50 3 3

2.00 2 2

1.00 1 1

2

1

13

1.00 1 1

11.75 12

1.25 1

1.00 1

1.00 1 1

1

1

12

Low

1

1

1

10

1

2

1

1

1

No (1), Somewhat (2), Yes (3)

1

3

1

2

1

No (1), Somewhat (2), Yes (3)

Activity Annual 

Expenditures

Low

1

We are confident that the FMC has an efficient and effective process which provides a reasonable 

assurance that payments are made for legitimate and proper expenses incurred by the FMC. The 

FMC maintains a very low erroneous payment percentage and strives to reduce payment errors by 

continuously reviewing, monitoring, and evaluating our programs and activities.

The FMC has not identified any program that constitutes a high-risk for improper payments. 

Therefore, the FMC considers all payments to fall within the realm of low risk. 

The National Finance Center (NFC) became the agency’s payroll provider in 2002 and is responsible 

for monitoring and reporting all payroll-related payments. Any overpayments made to an FMC 

employee by the NFC on behalf of the FMC, would be offset by NFC. In FY 2019, the FMC did 

not process any overpayments. The FMC did not identify any improper collections through the 

Intergovernmental Payments and Collections (IPAC). 

Efforts to recover the overpayments were conducted by the contracting officer’s representative, and 

finance and procurement staff through communication with the vendors through GSA and directly 

contacting the vendors. The FMC has since received credits for the overpayments.

I. Payment Reporting. To determine its improper payment rate, the FMC used a statistical 

sample conducted by BFS.

II. Recapture of Improper Payments Reporting. The FMC will continue to monitor 

payments to affect a zero-dollar improper payment figure and ensure that there is sufficient 

segregation of duties pertaining to all payments. The process entails an aggressive level of 

scrutiny of all IPAC collections made against the Commission. The FMC will continue to 

monitor all disbursements made on its behalf to ensure payments are valid and proper.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 60

III. Agency Improvement of Payment Accuracy with the Do Not Pay Initiative. The table 

below represents the improper payments made by the FMC in FY 2019 with percentage 

forecasts through FY 2022. 

Improper Payments Information Act Reduction Outlook FY 2019-2022

(millions)

Program

FY 19 

Outlays

FY 19 

IP %

FY 20 

IP $

FY 20 

%

FY 21 

%

FY 22 

%

Inspector General $0.00 0.00 $0.00 0.00 0.00 0.00

Operational and Administrative $0.00 0.00 $0.00 0.00 0.00 0.00

Totals $0.00 0.00 $0.00 0.00 0.00 0.00

IV. Barriers. There are no statutory or regulatory barriers that limit the agency’s ability to take 

corrective actions to address any improper payments.

V. Accountability. The FMC has a segregation of duties in place to ensure that all invoices 

processed for payment are legitimate expenses of the agency. All IPAC invoices are received 

by BFS and forwarded to OBF electronically for internal processing and payment 

authorization. When an invoice is received, it is first verified as a valid invoice belonging to 

the agency. OBF matches the invoice to documentation provided by the Contracting 

Officer’s Representative (COR) indicating that goods/services have been received by the 

Commission and approves the invoice for payment. BFS is advised of the purchase order 

the invoice is being paid against and the payment amount. OBF also ensures that sufficient 

funds have been obligated to make the payment and provides BFS with the period of 

performance. Once OBF staff has processed the payment authorization, the payment 

information is verified by a second OBF staff member. At that point, the invoice is 

electronically returned to BFS for processing. When the payment is loaded into the Oracle 

database, a final funds availability check is made by the financial system against the fund 

controls set for the FMC. OBF audits the payment information posted in the financial 

system.

The Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible for 

the efficient and effective utilization of spending authority granted the agency by Congress. 

The Chairman has delegated administrative funds control to the Director, OBF. The 

Director, OBF, has the responsibility to ensure that disbursements made by BFS on behalf 

of the FMC are legitimate expenses of the Commission and that sufficient funds are 

available to pay the agency’s expenses. The OBF is responsible for reducing and recovering 

improper payments and keeps senior agency officials apprised of all relevant activities.

VI. Agency Information Systems and Other Infrastructure.

a. The FMC does not have an in-house information system to help reduce improper 

payments. The agency utilizes the infrastructure and financial system maintained by BFS in 

Parkersburg, WV.

b. In its FY 2020 budget, the FMC requested funding to maintain the contract between 

the FMC and BFS for financial support and platform access to the Oracle database through 

Oracle’s Discoverer portal.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 61

FRAUD REDUCTION REPORT

The FMC has a low appetite for fraud. The FMC complies with the Fraud Risk and Data Analytics 

Act of 2015 and follows the Standards for Internal Control in the Government through its enterprise 

risk management program and financial accounting practices. The FMC’s Risk Committee, 

managing risk enterprise-wide, considers fraud risks on a regular basis. 

Financial stewardship is an important part of the FMC’s risk management strategy. Internal controls 

and financial and accounting data are subject to multiple levels of monthly and/or annual review 

performed internally by the FMC and externally by the BFS. The most recent IG risk assessment of 

the purchase card program, completed in 2018, concluded that risk related to the program is low.

The Commission has financial and administrative controls in place, including an internal controls 

policy which provides management and internal control processes for identifying and addressing 

major performance and management challenges and areas at greatest risk of fraud, waste, abuse and 

mismanagement. In 2019, the FMC’s IG, with the assistance of independent financial auditors,

completed a review of the Commission’s administrative control of funds. Its Assessment Report on the 

Agency’s Administrative Control of Funds, A-20-02a, determined that the Commission has an internal 

control system in place for its funds control and recommended additional opportunities to further 

strengthen the agency’s controls. The Commission’s administrative control of funds policy is in the 

process of being updated to include those recommendations. 

In addition, the Commission’s acquisitions policy protects the integrity of the contracting process, 

and includes ethical requirements and standards of conduct in accordance with the Procurement 

Integrity Act and Federal Acquisition Regulations.

The FMC does not oversee or have responsibility for any credit, grant, or loan programs. No new

programs were initiated in FY 2019, and no current programs are at high risk for fraud, abuse, or 

exposure to waste. 

REDUCE THE FOOTPRINT

Consistent with OMB Memorandum M-12-12, Promoting Efficient Spending to Support Agency Operations,

and guidance from Management Procedures Memorandum 2013-02, Freeze the Footprint, the FMC 

reports that it does not own any real property and leases space only through GSA. 

The Commission, a non-CFO Act agency, works closely with GSA to properly steward government 

resources. The FMC’s current office portfolio of properties totals 63,483 rentable square feet which 

is consistent with GSA occupancy agreements. In FY 2019, the FMC paid $3,320,677 in rental 

payments to GSA.

Table 1: Reduce the Footprint Policy Baseline Comparison 

FY 2015 (Baseline) FY 2019 Change (FY 2015 Baseline – FY 2019)

Square Footage (SF in millions) 0.067 0.063 0.004

Table 2: Reporting of O & M Cost – Owned and Direct Lease Buildings

FY 2015 Reported Cost FY 2019 Reported Cost Change in Baseline 

2015-2019

Operation and Maintenance (O&M) Costs N/A* N/A* N/A*

*The FMC does not directly lease or own any space, but has occupancy agreements with GSA.

The FMC’s current space meets program needs. The FMC is working with GSA to develop 

requirements for its current headquarters lease, which expires on October 31, 2022.
FMC FISCAL YEAR 2019| Performance and Accountability Report| 62

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 104-410, as amended by the Debt 

Collection Improvement Act of 1996, Pub. L. 104-134, and the Federal Civil Penalties Inflation Adjustment Act 

Improvements Act of 2015, Pub. L. 114-74, requires agencies to make regular and consistent inflationary 

adjustments of civil monetary penalties to maintain their deterrent effect. Below are the civil 

penalties that the FMC may impose, authority for imposing the penalty, dates of inflation 

adjustments, and current penalty levels. The Federal Register notice (84 FR 2459) may be viewed at: 

https://www.govinfo.gov/content/pkg/FR-2019-02-07/pdf/2019-01429.pdf

Penalty Statutory Authority Date of Previous 

Adjustment

Date of Current 

Adjustment

Maximum 

Penalty

Adverse impact on U.S. carriers by foreign 

shipping practices 46 U.S.C. 42304 January 15, 2018 January 15, 2019 $2,103,861

Knowing and Willful violation / Shipping Act 

of 1984, or Commission regulation or order 46 U.S.C. 41107(a) January 15, 2018 January 15, 2019 $60,039

Violation of Shipping Act of 1984, Commission 

regulation or order, not knowing and willful 46 U.S.C. 41107(b) January 15, 2018 January 15, 2019 $12,007

Operating in foreign commerce after tariff 

suspension 46 U.S.C. 41108(b) January 15, 2018 January 15, 2019 $120,079

Failure to provide required reports, etc. / 

Merchant Marine Act of 1920 46 U.S.C. 42104 January 15, 2018 January 15, 2019 $9,472

Adverse shipping conditions / Merchant 

Marine Act of 1920 46 U.S.C. 42106 January 15, 2018 January 15, 2019 $1,894,261

Operating after tariff or service contract 

suspension / Merchant Marine Act of 1920 46 U.S.C. 42108 January 15, 2018 January 15, 2019 $94,713

Failure to establish financial responsibility for 

non-performance of transportation* 46 U.S.C. 44102 January 15, 2018 January 15, 2019 $23,924$798

Failure to establish financial responsibility for 

death or injury* 46 U.S.C. 44103 January 15, 2018 January 15, 2019 $23,924$798

Program Fraud Civil Remedies Act / makes 

false claim 31 U.S.C. 3802(a)(1) January 15, 2018 January 15, 2019 $11,463

Program Fraud Civil Remedies Act / giving 

false statement 31 U.S.C. 3802(a)(2) January 15, 2018 January 15, 2019 $11,463

*These amounts are based on the penalties established in § 44104 for violations of §§ 44102 and 

44103: $5,000, plus $200 for each passage sold. These penalties were established in 1966 and, 

applying the statutory inflation adjustment formula, amount to $23,924, plus $798 for each passage 

sold, in current dollars. 

BIENNIAL REVIEW OF USER FEES

Agencies are required by the Chief Financial Officers Act of 1990 to conduct biennial reviews of fees 

and other charges that they impose, and to revise these fees and charges to cover program and 

administrative costs incurred as necessary. The Commission last updated user fees and published 

notice of its final rule, Update of Existing User Fees, on October 5, 2018, 83 FR 50290. User fee rates

will next be examined in 2020.