Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

April 1, 2019 – September 30, 2019 

FEDERAL MARITIME COMMISSION 
FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 31, 2019 

Office of Inspector General

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

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

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

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

30, 2019. 

During this reporting period, the OIG completed one program assessment, and initiated 

three audits. Specifically, at the request of the agency, the OIG completed an assessment of the 

agency’s administrative control of funds that is required to prevent Antideficiency Act violations. 

The OIG also initiated the annual financial statement audit and annual audit of the FMC’s 

information technology security; and initiated the second of three audits of the DATA Act. 

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

leadership and staff. 

 Respectfully submitted,

 Jon Hatfield 

 Inspector General

Enclosure
TABLE OF CONTENTS

Transmittal Letter

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

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

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

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

Completed Assessment............................................................................................................................................. 3

Open Audits .............................................................................................................................................................. 3

Hotline and Investigations........................................................................................................................................ 4

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

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

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

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

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

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

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

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

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

Pictured: Pier Container Terminals, the Port of Los Angeles, San Pedro, California.

 

Picture source: The Port of Los Angeles.
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EXECUTIVE SUMMARY

This semiannual report summarizes the activities and accomplishments of the Federal 

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

period April 1, 2019 through September 30, 2019. During this reporting period, the OIG 

completed one assessment; and initiated three audits. Specifically, the OIG completed an 

assessment of the FMC’s administrative control of funds. The OIG also initiated the annual 

financial statement audit and the annual information technology security audit; and initiated the 

second of three audits of the DATA Act. Additional details on these assignments can be found in 

subsequent sections of this report.

During the period, the OIG received no hotline complaints. There were no new 

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

reporting period, one hotline complaint was open and there were no investigations open. 

FEDERAL MARITIME COMMISSION

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

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

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

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

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

1920. 

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

the U.S. Senate, each serving five-year terms. Currently one of the Commissioner positions is

vacant. The majority of FMC personnel are located in Washington, D.C., however, the FMC also 

maintains a presence in Los Angeles, Seattle, New York, New Orleans, Houston, and South Florida 

through Area Representatives. These Area Representatives serve the major ports and 

transportation centers within their respective geographic areas, and provide information, liaison, 

and investigatory services on behalf of the FMC. 
OFFICE OF INSPECTOR GENERAL

The OIG congratulates Parker Skaats 

for passing all four parts of the Certified 

Public Accounting (CPA) examination. Mr. 

Skaats graduated from American University 

where he studied accounting, and he joined 

the OIG in the summer of 2018 as an auditor 

intern under the Pathways Internship 

Program. Mr. Skaats successfully completed 

the internship program requirements and was 

converted in early 2019 to a permanent fulltime position. The Inspector General 

believes passing the CPA exam early in Mr. 

Skaats’ professional career is a significant 

step and paves the way for greater 

responsibilities and opportunities for Mr.

Skaats.

 

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

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

General (IG) who reports to the FMC Commissioners and Congress. The OIG is responsible for 

conducting audits and investigations relating to the programs and operations of the FMC. Audits 

are conducted for the purpose of finding and preventing fraud, waste and abuse, and promoting 

economy, efficiency and effectiveness within the agency. The OIG investigations seek out facts 

related to allegations of wrongdoing on the part of FMC employees and individuals, or entities 

contracting with, or obtaining benefits from, the agency. The IG Act provides that the OIG shall 

have access to all agency records and may subpoena records from entities outside of the agency in 

connection with an audit or investigation. 

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

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

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

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

independence of the OIG. 

Pictured: Parker Skaats, Auditor.

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OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Assessment

Assessment Report on the Agency’s Administrative Control of Funds, A20-02a. The OIG 

was requested by the agency in the summer of 2019 to perform this assessment and a report was 

issued on September 30, 2019. The OIG contracted with Dembo Jones, P.C., the agency’s 

independent financial statement auditors, to perform this assessment. The agency’s administrative 

control of funds encompasses internal controls to prevent Antideficiency Act (ADA) violations 

and ensure agency expenditures and obligations do not exceed the amounts appropriated by 

Congress. 

The auditors determined the FMC has an internal control system in place for the 

administrative control of funds. As a result of the assessment, the auditors identified additional 

opportunities to further strengthen the agency’s controls. FMC management concurred with the 

recommendations. Therefore, in the OIG’s view, the combination of the current controls in place, 

and the additional controls once implemented by management, are expected to result in a sound 

and effective internal control environment for the agency’s administrative control of funds.

Open Audits 

DATA Act Audit, 2019, A20-1. USAspending.gov was launched in December 2007 to 

implement the Federal Funding Accountability and Transparency Act (FFATA) of 2006 by 

providing the public with free centralized access to information on Federal spending. The DATA 

Act expanded the reporting requirements pursuant to the FFATA. The DATA Act, in part, requires 

Federal agencies to report financial and award data in accordance with the established 

Government-wide financial data standards. In 2015, the Office of Management and Budget 

(OMB) and Department of the Treasury published 57 data definition standards and required 

Federal agencies to report financial data in accordance with these standards for DATA Act 

reporting, beginning May 2017.

The DATA Act also requires the IG of each Federal agency to review a statistically valid 

sample of the spending data submitted by its Federal agency and to submit to Congress a publicly 

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available report assessing the completeness, timeliness, quality, and accuracy of the data sampled 

and the implementation and use of the Government-wide financial data standards by the Federal

agency. The OIG commenced the audit in the summer of 2019 and plans to issue the final audit 

report by November 8, 2019; this is the second of three required audits of the DATA Act.

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

audit objectives are to opine on whether the FMC’s FY 2019 financial statements follow U.S. 

Generally Accepted Accounting Principles and present fairly the financial position of the agency. 

The audit will also review internal controls over financial reporting, and agency compliance with 

financial related laws and regulations. The statements to be audited are the Balance Sheet as of 

September 30, 2019, and the related Statement of Net Cost, Statement of Changes in Net Position, 

Statement of Budgetary Resources, and Statement of Custodial Activity.

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

(FISMA) FY 2019, A20-03. The objective of the independent audit of the FMC’s information 

security program is to identify improvements for the agency’s information technology security 

program. The audit will assess compliance with FISMA and related information security policies, 

procedures, standards, and guidelines. The scope of this audit includes general controls of the FMC 

network and applications housing service contracts, tariff location filings, and FMC license 

applications. The OIG will evaluate potential system vulnerabilities and assess management 

actions to implement prior-year recommendations.

Hotline and Investigations

The Inspector General Act of 1978, as amended, provides that the IG may receive and 

investigate complaints or information concerning possible allegations of fraud, waste, and abuse 

occurring within FMC programs and operations by employees or contractors. Matters of possible 

wrongdoing are referred to the OIG in the form of allegations or complaints from a variety of 

sources, including FMC employees, other government agencies and the general public. 

During the period, the OIG received no hotline complaints. There were no new 

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

reporting period, one hotline complaint was open and there were no investigations open. 

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Memorandum of Understanding

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

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

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

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

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

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

Act.

Review of Legislation

As required by the Inspector General Act of 1978, as amended, the OIG routinely reviews 

proposed legislation and regulations. The purpose of these reviews is to assess whether the 

proposed legislation or regulation: (1) impacts the economy and efficiency of FMC programs and 

operations; and (2) contains adequate internal controls to prevent and detect fraud, waste, and 

abuse. 

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

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

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

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

agencies; and 

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

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

workforce in the Offices of Inspectors General. 

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

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

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

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

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

auditor training requirements. 

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

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

operations. Specifically, the OIG is a member of CIGIE, participates in the monthly CIGIE 

meetings, and periodically assists CIGIE on special projects. 
SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS

IG Act Reference Reporting Requirement Pages

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

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

abuses, or deficiencies

None

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

actions have not been completed

None

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

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

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

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

unsupported costs, and funds put to better use

8

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

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

and unsupported costs

None

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

that funds be put to better use

None

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

issued before the commencement of this reporting period for 

which no management decision was made by the end of the 

reporting period; for which comments were not returned 

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

any outstanding unimplemented recommendations

None

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

management decisions

None

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

general disagrees

None

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

Management Improvement Act (FFMIA) of 1996

None

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

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

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

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

statistical table under Section 5(a)(17)

None

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

employee where allegations of misconduct were 

substantiated

None

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

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

with the independence of the OIG

None

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

evaluation, and audit conducted that is closed and was not 

disclosed to the public; and investigation conducted by the 

OIG involving a senior Government employee that is closed 

and was not disclosed to the public

None

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

than 6 Months

Recommendations

Report Title Report 

Number

Issue 

Date Number Open Closed

Evaluation of the FMC’s 

Information Technology 

Inventory

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

*In a memorandum dated October 16, 2019, the Managing Director informed the IG that 

the agency has already corrected most of the recommendations. The Office of Information 

Technology (OIT) has replaced the manual computer equipment inventory spreadsheet with 

a new automated tracking system, and OIT expects to have all computer equipment 

barcoded with the new automated system by December 31, 2019. The OIG plans to followup on the agency’s corrective actions during the upcoming semiannual period to enable the 

OIG to close the recommendations.

TABLE II - Listing of Reports Issued

Report Title Assignment 

Number

Issue 

Date 

Questioned 

Costs

Unsupported 

Costs

Funds 

Put to 

Better 

Use

Assessment Report on the 

Agency’s Administrative 

Control of Funds

A20-02a 09/30/19 $0 $0 $0

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TABLE III - Reports with Questioned Costs

Number

of 

Reports

Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0

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

Subtotal (A + B) 0 $0 $0

C. For which a management decision was made 

during the reporting period. 

0 $0 $0

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

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

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0

9 
TABLE IV - Recommendations that Funds be Put to Better Use

Number

of 

Reports Dollar Value

A. For which no management decision has been made 

by the commencement of the reporting period. 0 $0 

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

Subtotal (A + B) 0 $0

C. For which a management decision was made during 

the reporting period. 0 $0 

(i) dollar value of recommendations that were 

agreed to by management; and 

0 $0

(ii) dollar value of recommendations that were not 

agreed to by management. 

0 $0

D. For which no management decision has been made 

by the end of the reporting period. 0 $0 

E. Reports for which no management decision was 

made within six months of issuance. 0 $0 

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Appendix A - Peer Review Activity

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010 (Section 989C of P.L. 111-203), which amended Section 5 of the Inspector General Act of 

1978, OIGs are required to include in their semiannual reports (SAR) to Congress the results of 

peer reviews of their offices, as well as outstanding and not fully implemented recommendations 

from peer reviews the OIG received from another OIG, and outstanding and not fully implemented 

recommendations the OIG made in any peer review it performed for another OIG.

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

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

there were no recommendations contained in the system review report. 

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

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

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

contained in the system review report. 

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HOTLINE COMPLAINTS 

The success of the OIG mission to prevent fraud, waste and abuse 

depends on the cooperation of FMC employees and the public. 

Employees and the public are encouraged to contact the OIG regarding 

any incidents of possible waste, fraud or abuse occurring within FMC 

programs and operations.

A COMPLAINT CAN BE REPORTED BY CALLING OUR 24-HR DIRECT LINE: 

(202) 523-5865

ONLINE COMPLAINT FORM: 

https://www2.fmc.gov/oigcomplaints/

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO: 

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL. YOU CAN CHOOSE TO REMAIN 

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR 

GENERAL BY SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR 

ADDITIONAL INFORMATION.

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