Federal Maritime Commission

Performance and Accountability Report

Fiscal Year 2013
The United States

Federal Maritime Commission

Our Mission: 

To foster a fair, efficient, and reliable 

international ocean transportation system 

and to protect the public 

from unfair and deceptive practices

__________________________________________

This Fiscal Year 2013 Performance and Accountability Report is published by the 

Federal Maritime Commission. An electronic version of this report can be found 

at http://www.fmc.gov/about/performance_and_accountability_reports.aspx. 

Please refer any questions concerning this report to the Office of the Managing 

Director, Federal Maritime Commission, at (202) 523-5800

Published in Washington, D.C.

December 16, 2013
ABOUT THIS REPORT

The Federal Maritime Commission‟s Performance and 

Accountability Report provides program and financial 

information that enables the President, Congress, and the 

public to assess the performance of the agency relative to 

its mission and the resources entrusted to it. This PAR 

satisfies the following legislation:

The Federal Manager‟s Financial Integrity Act of 

1982 requires continuous evaluations and reporting 

of the adequacy of the systems of internal 

accounting and administrative controls. The Act 

can be found at the following URL:

http://www.whitehouse.gov/omb/financial/fmfia198

2.html

The Chief Financial Officers Act of 1990 provides 

for the production and submission of complete, 

reliable, timely, and consistent financial information 

for the use of the Executive Branch of the 

government and the Congress in the financing, 

management and evaluation of Federal programs. 

The Act can be found at the following URL:

http://www.gao.gov/special.pubs/af12194.pdf

The Reports Consolidation Act of 2000 authorizes 

agencies to consolidate several reports in order to 

provide performance, financial, and other related 

information in a more useful manner. The Act can 

be found at the following URL:

http://www.gpo.gov/fdsys/pkg/PLAW106publ531/html/PLAW-106publ531.htm

The Inspector General Reform Act of 2008 amends 

the Inspector General Act of 1978 to enhance the 

independence of the Inspectors General, to create a 

Council of the Inspectors General on Integrity and 

Efficiency, and for other purposes. The Act can be 

found at the following URL:

http://www.govtrack.us/congress/billtext.xpd?bill=s

110-2324

The Government Performance and Results 

Modernization Act of 2010 (GPRA Modernization 

Act) requires an annual report that measures the 

performance results of the agency against the 

established agency goals. The Act can be found at 

the following URL:

http://www.whitehouse.gov/omb/performance/gprm

-act

The Government Management Reform Act of 1994 

requires the submission of audited financial 

statements. The Act can be found at the following 

URL:

http://govinfo.library.unt.edu/npr/library/misc/s2170

.html

The Improper Payments Elimination and Recovery 

Act of 2010 provides for estimates and reports of 

improper payments by Federal agencies. The Act 

can be found at the following URL:

http://www.govtrack.us/congress/billtext.xpd?bill=h

111-3393

There are four chapters in this report. The first, 

Management’s Discussion and Analysis (MD&A), 

provides an overview of financial results, a high-level 

discussion of program performance, management 

assurances on internal control and financial management 

systems compliance; and other management information, 

initiatives, and issues. The second chapter, Program 

Performance Information, provides data on the agency‟s 

progress toward meeting its strategic goals and targets 

during fiscal year 2013. The third, Financial 

Information, provides financial details including a 

message from the Chief Financial Officer, the 

independent auditor‟s report, and the audited financial 

statements. The fourth chapter, Other Information, 

includes a statement prepared by the IG summarizing 

what the Office of the Inspector General considers to be 

the most serious management and performance 

challenges facing the Agency; a report on improper 

payments, and a table summarizing the financial 

statement audit.
Table of Contents

A MESSAGE FROM THE CHAIRMAN ................................................................................... i

Chapter One MANAGEMENT’S DISCUSSION and ANALYSIS 0

Introduction ................................................................................................................................. 1

Regulatory Responsibility ........................................................................................................... 4

Future Challenges........................................................................................................................ 5

Program Performance Overview................................................................................................. 7

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

Financial Statement Highlights................................................................................................. 14

Systems, Controls, and Legal Compliance................................................................................ 17

CHAIRMAN‟S FMFIA STATEMENT OF ASSURANCE..................................................... 20

Chapter Two PROGRAM PERFORMANCE INFORMATION 21

Annual Performance Report...................................................................................................... 22

Chapter Three FINANCIAL INFORMATION 27

Message from the Chief Financial Officer................................................................................ 28

PRINCIPAL STATEMENTS - LIMITATIONS OF THE FINANCIAL STATEMENTS...... 29

Independent Auditor‟s Report................................................................................................... 31

BALANCE SHEET .................................................................................................................. 37

STATEMENT OF NET COST ................................................................................................ 38

STATEMENT OF CHANGES IN NET POSITION............................................................... 39

STATEMENT OF BUDGETARY RESOURCES .................................................................. 40

STATEMENT OF CUSTODIAL ACTIVITY ........................................................................ 41

FEDERAL MARITIME COMMISSION ................................................................................. 56

NOTES TO THE FINANCIAL STATEMENTS ..................................................................... 56

Chapter Four OTHER INFORMATION 68

Office of Inspector General - Fiscal Year 2013 Management Challenges ............................... 70

Comments on IG-Identified Management and Performance Challenges.................................. 74

Improper Payments Information Act......................................................................................... 76

Summary of Financial Statement Audit .................................................................................... 78
i

A MESSAGE FROM THE CHAIRMAN

I am pleased to submit this Performance and Accountability Report 

(PAR) for fiscal year 2013. This report reflects the Federal Maritime

Commission‟s program performance and financial activities over the 

past year. I am also very pleased to report that, due to the diligence, 

dedication, and hard work of the Commission‟s staff, all of this 

agency‟s performance goals were met or exceeded during the past

year even in the face of sequestration, limited budget, and furlough. 

The Commission carries out important, statutorily-mandated 

programs guided by a twofold strategic focus: maintaining an 

efficient and competitive international ocean transportation system;

and protecting the public from unlawful, unfair and deceptive ocean 

transportation practices. These key initiatives allow the Commission to resolve issues that have 

an impact on importers and exporters, as well as to increase U.S. exports and further the interests 

of the greater shipping community. A fair, efficient, and adequate ocean transportation system 

depends on the FMC‟s ability to evaluate carrier and terminal agreements for anti-competitive 

impact and to license ocean transportation intermediaries to protect the shipping public and 

facilitate international trade. In addition, this Commission‟s oversight of ocean common 

carriers, ocean transportation intermediaries, and marine terminal operators is an important 

element in the effort to protect our Nation‟s seaports. 

The Commission is charged with the regulation of U.S. oceanborne foreign commerce valued at 

$930 billion annually and accounting for 29.3 million twenty-foot equivalent units (TEUs) of 

import and export cargo. The FMC continues to cultivate a regulatory system that ensures 

competition, facilitates commerce, encourages reliable service to U.S. exporters and importers,

minimizes government intervention and costs, and remains alert to foreign activities that have the 

potential to harm the U.S. maritime industry. 

Unique among Federal agencies, the FMC regulates virtually all entities involved in liner 

shipping, receiving, handling, and transporting cargo and passengers in foreign commerce. In 

today‟s global economy, efficient and reliable maritime transportation is critical to sustainable 

economic growth. The FMC‟s unique mission affords it the opportunity to assist front-line 

security efforts by providing information regarding the backgrounds of parties using our Nation‟s 

supply chain, including those with direct access to our seaports. As detailed in this report, the 

Commission took a number of steps during fiscal year (FY) 2013 to ensure that it would be fully 

successful in its mission to foster a fair, efficient, and reliable international ocean transportation 

system and to protect the public from unfair and deceptive practices. 

The FMC‟s activities are driven by the goals and objectives of its Strategic Plan. Accomplishing 

our strategic goals is essential to ensuring a competitive ocean transportation system, facilitating 

America‟s international commerce, and encouraging reliable liner service for U.S. exporters and 

importers. The implementation of those goals also directly supports the President‟s commitment 

to economic growth and job creation. Commission programs related to monitoring international 
ii

oceanborne trade conditions directly and indirectly advance the President‟s National Export 

Initiative by promoting access to foreign markets for American exports and efficient supply 

chains for the importation of goods for domestic production and consumption.

The FMC‟s Strategic Plan for 2010-2015 embraces our statutory mandate and agency objectives 

referenced above. Fiscal year 2013 was the fifth year in which there has been a quantitative 

measurement of performance goals, employing measures and targets. The Commission‟s actual 

performance is compared with the targeted levels of performance established in the Strategic 

Plan. During the year, we focused on seven performance goals, while continuing our various 

ongoing day-to-day activities. 

The fiscal year 2013 independent financial audit resulted in our tenth consecutive unqualified 

opinion. In the Management Assurances section (see page 20), I provide my assurance that the 

FMC has no material weaknesses, significant deficiencies, or instances of non-compliance with 

laws and regulations to report. The performance data described in this PAR were compiled and 

evaluated using the techniques described in this report for achieving the required level of 

credibility for the verification and validation of performance data relative to its intended use, and 

I have no reason to doubt the completeness or reliability of our performance data. Additionally, 

the financial and performance data presented in this report are complete, reliable, and accurate in 

keeping with the guidance from the Office of Management and Budget.

The efforts described in this report reflect the hard work and dedication of the Federal Maritime 

Commission‟s staff. The aforementioned is notable in light of the Commission‟s budget 

challenges given the sequester environment. I would be remiss not to comment on my concerns 

as to continued and sustainable operations.

I look forward to continuing to work with staff and my fellow Commissioners to build on our 

achievements in the coming years. 

Sincerely,

/s/

Mario Cordero

Chairman

December 16, 2013
Chapter One

MANAGEMENT’S DISCUSSION

and ANALYSIS

Fiscal Year 2013
Chapter One Management’s Discussion and Analysis

1

Introduction

This Performance and Accountability Report (Report or PAR) represents the completion of the 

Federal Maritime Commission‟s program and financial management process for fiscal year (FY) 

2013, which began with mission and program planning, continued with the formulation and 

justification of FMC‟s budget submission to the President and Congress, through budget 

execution, and ended with a report of our program performance and the use of resources. This 

report was prepared pursuant to the requirements of the Chief Financial Officers Act, as 

amended by the Reports Consolidation Act, and the Office of Management and Budget (OMB) 

Circular No. A-136, Financial Reporting Requirements (Revised August 3, 2012), and covers the 

Commission‟s activities from October 1, 2012 through September 30, 2013.

Chapter One provides an overview of the Commission. It consists of eight sections: Introduction

describes the agency, its mission and structure; Regulatory Responsibility describes its regulatory 

mandate; Future Challenges includes information regarding changes in the maritime industry; 

Program Performance Overview reports on the FMC‟s success in achieving its strategic goals

and describes activities related to relevant initiatives; Financial Performance Overview discusses 

the FMC‟s financial position and audit results; Financial Statement Highlights gives an overview 

of the major financial statements; Systems, Controls, and Legal Compliance discloses the FMC‟s 

compliance with certain legal and regulatory requirements; and the Chairman’s FMFIA 

Statement of Assurance, which provides assurance that the financial management system utilized

(via a Federal shared-services provider) conforms to applicable financial systems requirements, 

and that no material weaknesses were found in the design or operation of internal controls.

About the FMC

The Federal Maritime Commission (FMC, agency or Commission) is an independent agency 

which regulates oceanborne transportation in the foreign commerce of the United States. The 

Commission administers the Shipping Act of 1984 (1984 Act) as amended by the Ocean 

Shipping Reform Act of 1998 (OSRA); section 19 of the Merchant Marine Act, 1920 (1920 Act); 

the Foreign Shipping Practices Act of 1988 (FSPA); and sections 2 and 3 of Public Law (P.L.) 

89-777 (46 U.S.C. §§ 44102 and 44103). The Commission monitors the activities of ocean 

common carriers, marine terminal operators (MTOs), ports and ocean transportation 

intermediaries (OTIs) (non-vessel-operating common carriers and ocean freight forwarders) who 

operate in the U.S. foreign commerce to ensure that 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 appropriately remedy malpractices 

and violations of the prohibited acts set forth in section 10 of the 1984 Act; reviews competitive 

activities of common carrier alliances and other agreements among common carriers and/or 

terminal operators; monitors the laws and practices of foreign governments which could have a 

discriminatory or otherwise adverse impact on shipping conditions in U.S. trades, and imposes 

remedial action, as appropriate, pursuant to section 19 of the 1920 Act or FSPA; enforces special 

regulatory requirements applicable to carriers owned or controlled by foreign governments; 

processes and reviews agreements, service contracts, and service arrangements pursuant to the 

1984 Act for compliance with statutory requirements; and reviews common carriers‟ privately 

published tariff systems for accessibility, accuracy, and reasonable terms. The FMC also issues 
Chapter One Management’s Discussion and Analysis

2

licenses to qualified OTIs in the U.S., ensures that all OTIs are bonded or maintain other 

evidence of financial responsibility, and, pursuant to 46 U.S.C. §§ 44102 and 44103, ensures that 

passenger vessel operators (PVO) demonstrate adequate financial responsibility to indemnify 

passengers in the event of nonperformance of voyages or passenger injury or death. 

Organization

The FMC is composed of five Commissioners appointed for five-year terms by the President 

with the advice and consent of the Senate. No more than three members of the Commission may 

belong to the same political party. The President designates one Commissioner to serve as 

Chairman, the Chief Executive and Administrative Officer of the agency. 

The FMC‟s organizational units consist of: Offices of the Commissioners; Offices of the 

General Counsel (OGC), Secretary (OS), Consumer Affairs and Dispute Resolution Services 

(CADRS), Administrative Law Judges (OALJ), Equal Employment Opportunity (EEO), 

Inspector General (OIG), Managing Director (OMD), Budget and Finance (OBF), Human 

Resources (OHR), Information Technology (OIT), and Management Services (OMS); the 

Bureaus of Certification and Licensing (BCL), Enforcement (BOE), and Trade Analysis (BTA); 

and Area Representatives (ARs). The majority of FMC personnel are located in Washington, 

D.C., with ARs stationed in New York, New Orleans, Los Angeles, Seattle, Houston, and South 

Florida.
Chapter One Management’s Discussion and Analysis

3

COMMISSIONER 

DYE

COMMISSIONER 

LIDINSKY

COMMISSIONER 

DOYLE

CHAIRMAN 

CORDERO

Office of the 

Inspector 

General

Office of Equal 

Employment 

Opportunity

Office of the 

Managing 

Director

COMMISSIONER 

KHOURI

Office of 

the General 

Counsel

Office of 

the 

Secretary

Office of 

Administrative 

Law Judges

Office of 

Consumer Affairs 

and Dispute 

Resolution Services

Office of 

Budget and 

Finance

Office of 

Human 

Resources

Office of 

Management 

Services

Office of 

Information 

Technology

Bureau of 

Certification 

and 

Licensing

Bureau of 

Enforcement

Bureau of 

Trade 

Analysis

Area Representatives 

Houston, TX 

Los Angeles, CA 

New Orleans, LA 

New York, NY 

Seattle, WA 

South Florida

FEDERAL MARITIME COMMISSION 

ORGANIZATION CHART 

as of 

SEPTEMBER 30, 2013

Administrative 

Direction

Technical Direction
Chapter One Management’s Discussion and Analysis

4

Regulatory Responsibility

The Commission‟s principal regulatory responsibilities include:

monitoring the activities of ocean common carriers, marine terminal operators (MTOs), 

ports and ocean transportation intermediaries (OTIs) who operate in the U.S. foreign 

commerce to ensure just and reasonable practices;

reviewing competitive activities of rate discussion agreements, carrier alliances, and other 

agreements among common carriers and/or MTOs;

licensing qualified OTIs in the U.S. and ensuring that all OTIs (including foreign OTIs) 

are bonded or maintain other evidence of financial responsibility;

maintaining trade monitoring, enforcement, and dispute resolution programs to assist 

regulated entities in achieving compliance and to detect and remedy malpractices and 

violations of the prohibited acts set forth in section 10 of the 1984 Act;

providing dispute resolution services to the industry and consumers;

monitoring the laws and practices of foreign governments for any discriminatory or 

otherwise adverse impact on shipping conditions in U.S. trades, and impose appropriate 

remedial action pursuant to section 19 of the 1920 Act or FSPA;

enforcing special regulatory requirements applicable to carriers owned or controlled by 

foreign governments;

ensuring that passenger vessel operators (PVOs) demonstrate adequate financial 

responsibility to indemnify passengers in the event of nonperformance of voyages or 

passenger injury or death pursuant to 46 U.S.C. §§ 44102 and 44103; and

processing and reviewing agreements, service contracts, and service arrangements 

pursuant to the 1984 Act for compliance with statutory requirements; and reviewing 

common carriers‟ privately published tariff systems for accessibility, accuracy, and 

reasonable terms.

The FMC is authorized by the FSPA, the 1920 Act, and 1984 Act as amended by OSRA to take 

action to ensure that the foreign commerce of the U.S. is not burdened by non-market barriers to 

ocean shipping. The FMC may take countervailing action to correct unfavorable shipping 

conditions in U.S. foreign commerce and may impose penalties. The FMC may address actions 

by carriers or foreign governments that adversely affect shipping in the U.S. foreign oceanborne 

trades including the intermodal operations of carriers or the operations of OTIs, or that impair 

access of U.S.-flag vessels to ocean trade between foreign ports.

The 1984 Act is applicable to the operations of common carriers and other persons engaged in 

U.S. foreign commerce. It exempts agreements that have become effective under the 1984 Act 

from the U.S. antitrust laws, as contained in the Sherman and Clayton Acts. The FMC reviews 

and evaluates agreements to ensure that they do not exploit the grant of antitrust immunity, and 

to ensure that agreements do not otherwise violate the 1984 Act or result in an unreasonable 

increase in transportation cost or unreasonable reduction in service.
Chapter One Management’s Discussion and Analysis

5

In addition to monitoring relationships among carriers, the FMC is responsible for ensuring that 

individual carriers, as well as those permitted by agreement to act in concert, fairly treat shippers 

and other members of the shipping public in accordance with the 1984 Act‟s prohibition against 

undue discrimination. The 1984 Act requires all carriers to make their rates, charges, and 

practices available in automated tariff systems available electronically to the public. Non-vesseloperating common carriers (NVOCCs) may assess the rates and charges published in their tariffs 

or may offer service arrangements or negotiated rate agreements with shipping customers. 

Ocean common carriers are permitted to enter into service contracts with their shipper customers. 

Such contracts are filed electronically with the FMC in an Internet-based system, and are 

provided confidential treatment by the FMC as required by the Act. The FMC does not have the 

authority to approve or disapprove general rate increases (GRIs) or individual commodity rate 

levels in the U.S. foreign commerce, except with regard to certain foreign government-owned or 

-controlled carriers.

Sections 2 and 3 of P.L. 89-777 require the operators of passenger vessels with 50 or more berths 

who embark passengers at U.S. ports to establish financial coverage to indemnify passengers in 

cases of death, injury, or nonperformance of transportation. The FMC certifies such operators 

upon the submission of satisfactory evidence of financial responsibility. 

The FMC ensures that all OTIs operating in the foreign commerce of the U.S. have established 

the required financial responsibility to protect shippers from financial loss. Additionally, the 

FMC licenses all U.S. OTIs and requires registration of all foreign NVOCCs serving U.S. trades.

The FMC carries out its regulatory responsibilities by conducting informal and formal 

investigations, holding hearings, considering evidence, rendering decisions, issuing appropriate 

orders, and implementing regulations. A vigorous enforcement program is carried out –

assessing civil penalties for Shipping Act violations. The FMC also adjudicates and mediates 

disputes involving the regulated community, the general shipping public, and other affected 

individuals or interest groups.

All of the above activities are supported by the FMC‟s management and support functions of

information technology, financial management, human resources, and management services.

The FMC oversees more than 6,600 regulated persons (PVOs, vessel-operating common carriers

(VOCCs), MTOs, conferences, OTIs, etc.).

Future Challenges

In the coming fiscal years, the Commission‟s policy and funding priorities will continue to center 

on fostering a viable and vibrant liner shipping environment critical to the nation‟s international 

trade and economic growth. We will enforce the Commission‟s governing statutes and 

regulations when necessary to protect the shipping public, but stress voluntary compliance and 

use of dispute resolution techniques to resolve issues quickly with minimal cost. In the current 

climate of serious budgetary constraints, the Commission is ever mindful of the importance of 

investing in information technology that can improve efficiency and provide greater public 

access, while reducing costs over time, and improvement of, and investment in, the FMC‟s 

information technology capability is currently the urgent priority for the Commission.
Chapter One Management’s Discussion and Analysis

6

The FMC‟s regulatory processes are under constant review. As economic conditions alter the 

state of our trades, regulations are revised to respond to new conditions. As part of an ongoing 

Plan for Retrospective Review of Existing Rules, the FMC will review, evaluate, and make 

recommendations concerning the filing and processing of agreements, quarterly monitoring 

reports, agreement meeting minutes, regulations governing service contracts, and NVOCC 

service arrangements. In fiscal years 2014 and 2015, the Commission will implement the recent 

rule changes to the passenger vessel program and seek alternative ways to enhance PVO 

monitoring procedures; review suggested amendments to the regulations regarding OTI licensing 

and financial responsibility requirements in light of changed industry circumstances; and 

continue efforts to develop and implement an improved electronic application process for both 

OTIs and PVOs. A review of Marine Terminal Operator Schedule regulations is planned to 

begin in FY 2015.

The Commission will not only continue to monitor key U.S. trade lanes but also will review and 

analyze the competitive impact of agreements with particular emphasis on issues of adequate 

vessel capacity and equipment availability. With increasing pressure on consolidation in the 

industry, environmental concerns, port congestion and rising energy costs, the Commission is 

particularly sensitive to the impact on the nation‟s exporters and their need for efficient ocean 

transportation in reaching foreign markets. The FMC will continue to monitor service contracts 

and tariffs in key trades as barometers of market cycles and shifts in the balance of supply and 

demand. The FMC will continue to expand and promote its compliance-focused program to 

monitor and audit ocean common carrier, NVOCC, and ocean freight forwarder operations.

The FMC will continue to expand its participation in security initiatives as they relate to U.S. 

ocean commerce, specifically working 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. It is anticipated that requests for facilitation and 

commercial arbitration will increase due to outreach efforts to encourage provisions within 

service contracts that identify the FMC as an ADR provider in the event of disputes. Efforts to 

further expand awareness of the Commission‟s ADR services will continue through internal and 

external education programs, training, and other appropriate methods. Use of mediation will be 

promoted to assist in resolving formal proceedings, service contract matters, and other significant 

disputes. Further, the Commission is working to launch an educational webinar series to educate 

consumers and regulated entities regarding regulations, shipping trends and best practices, and 

the effective use of FMC services to resolve shipping disputes. 

The use of technology and dissemination of public information is increasingly important; webbased and social media-based accessibility to Commission services and information will 

facilitate public interaction, while adding greater efficiencies to internal business processes.

Overall emphasis will be placed on facilitating the commercial flow of exports and imports, and 

the FMC will continue to provide services and outreach to the shipping public to assist in the 

implementation of industry practices that can improve the ocean transportation system. These 

actions and more will provide the means for the FMC to accomplish its stated mission to foster a 

fair, efficient, and reliable international ocean transportation system and to protect the public 

from unfair and deceptive practices.
Chapter One Management’s Discussion and Analysis

7

The accomplishment of the Commission‟s strategic goals is critical to the President‟s goals to 

encourage economic growth, invest in the future, and responsibly govern the nation. The smooth 

flow of international commerce is vital to the national economy in both providing access to 

foreign markets for our exports and ensuring the availability of imported goods for domestic 

production and consumption.

Overall, the Commission will focus on actions that will facilitate and support the President‟s 

National Export Initiative by promoting access to foreign markets for American exports and 

efficient supply chains for the importation of goods for domestic production and consumption. 

Program Performance Overview

The FMC, like other Federal agencies, provides a performance plan to Congress, pursuant to the 

Government Performance and Results Act (GPRA). The FMC has organized its performance 

goals to achieve its strategic goals. The FMC‟s Strategic Plan Fiscal Years 2010-2015 (Revised) 

is available on the FMC‟s website. The complete FY 2013 Program Performance Report is 

contained in Chapter 2, Program Performance.

During FY 2013, the Commission continued to refine its business practices. As economic 

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

part of an ongoing Plan for Retrospective Review of Existing Rules, the FMC reviewed, 

evaluated, and made recommendations concerning the filing and processing of agreements, 

quarterly monitoring reports, and agreement meeting minutes. A review of the regulations 

governing service contracts and NVOCC service arrangements was also begun.

Achieving Strategic Goal Results

The FMC has a specific process in place for measuring performance. Performance goals were 

developed to promote both of the FMC‟s strategic goals, and the processes or activities required 

to achieve the goals were identified. The agency then specified the outcome it believes will 

result from accomplishing each stated goal, and agreed on performance indicators as the 

quantifiers of performance. Fiscal year 2013 was the fifth year in which the FMC undertook to 

quantify and measure performance goals. The Commission‟s actual performance in FY 2013 is 

compared with the targeted levels of performance established in the agency‟s Strategic Plan 

Fiscal Years 2010-2015 (Revised). Taken together, performance measures and targets under 

each strategic goal were designed to enhance and further those goals each fiscal year, bringing 

the agency closer to its ideal of full achievement of its strategic goals. Our experience in the 

years 2010 through 2012 enabled us to set realistic targets for FY 2013 in the revised strategic 

plan.
Chapter One Management’s Discussion and Analysis

8

Historical Performance of Strategic Goals and Objectives

Strategic Goal Objective Performance Measures 2011 2012 2013

Goal 1. Maintain an 

Efficient and 

Competitive 

International Ocean 

Transportation System

1. Identify and take 

action to address 

substantially anticompetitive conduct or 

unfavorable conditions 

in U.S. trades.

Percentage share of total U.S. 

international ocean-borne trade 

moved by containership, as an 

indicator of liner shipping 

efficiency.

TARGET

18.5% 19% 19.5%

ACTUAL

17.9% 18.7% 19.5%

Goal 2. Protect the 

public from unlawful, 

unfair and deceptive 

ocean transportation 

practices and resolve 

shipping disputes.

1. Identify and take 

action to end unlawful, 

unfair and deceptive 

practices.

Percentage of enforcement 

actions taken under the 1984 Act 

successfully resolved through 

favorable judgment, settlement, 

issuance of default judgment, or 

compliance letter or notice.

TARGET

72% 74% 76%

ACTUAL

82% 88% 78.9%

2. Prevent public harm 

through licensing and 

financial responsibility 

requirements.

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.

TARGET

60% 70% 75%

ACTUAL

77% 90.2% 87.6%

Percentage of cruise line 

operators examined during the 

year that have the full financial 

coverage required by regulation 

to protect against loss from nonperformance or casualty.

TARGET

91% 92% 93%

ACTUAL

91% 100% 100%

3. Enhance public 

awareness of agency 

resources, remedies and 

regulatory requirements through education and outreach.*

Percentage of key Commission 

issuances, orders, and reports are 

available through the 

Commission‟s website within 5 

working days of receipt.

TARGET

72% 74% 76%

ACTUAL

72% 79% 86%

4. Impartially resolve 

international shipping 

disputes through ADR 

and adjudication.

Number of cases opened and 

closed each fiscal year using 

ombuds and ADR services 

assisting consumers to recover 

goods or funds.

TARGET

625 700 800

ACTUAL

631 893** 800

Percentage of formal complaints 

or Commission initiated orders 

of investigation completed 

within 2 years of filing or 

Commission initiation.

TARGET

52% 54% 56%

ACTUAL

60% 73% 91%

* This measure was revised for FY 2011-2015. In FY 2010, the measure was: Percentage of decisions on completed 

OTI license applications rendered within 90 business days, facilitating lawful operation of OTIs with the appropriate 

character and experience requirements. The target for FY 2010 was 55%.

** The FY 2012 actual number of cases includes cases resolved by the Commission‟s Area Representatives. This is 

a new adjustment for this fiscal year.
Chapter One Management’s Discussion and Analysis

9

A brief overview of the agency‟s success includes the following:

Strategic Management of Human Capital – The FMC continues to implement the strategic 

goals, strategies, and measures of results outlined in the 2012-2017 Human Capital Plan, 

Workforce Plan, and Accountability Plan in accordance with OPM‟s Human Capital Assessment 

and Accountability Framework during FY 2013.

The Human Capital and Workforce Plans include strategies to recruit and retain a highly 

qualified and diverse workforce. The Human Capital Plan includes improved marketing of the 

FMC; streamlining of the application process in alignment with Hiring Reform; targeting 

recruitment pools and areas of consideration to increase the diversity of applicants; and 

incorporates organizational needs based on the annual OPM Federal Employee Viewpoint 

Survey results. The Workforce Plan incorporates workforce diversity and succession planning 

strategies and goals. In order to meet mission objectives, the FMC is actively working to define 

and plan for the workforce of the future, consistent with the current Administration‟s programs 

and reform initiatives.

Additionally, FMC streamlined human resources functions through various human resources 

information systems, including a new electronic employee official personnel file, electronic 

questionnaires for background investigations, and enhanced self-service personnel actions 

available online.

Leadership is recognized as a critical asset, and at the close of FY 2013, three-fourths of the 

FMC‟s executives were eligible for optional retirement. A systematic succession management 

process will be followed to allow the projection of our needs, prepare individuals 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. As funds become available, 

training and development in leadership competencies within a technical context will be provided 

to prepare the next generation of leaders at the Commission. 

Competitive Sourcing - The FMC submitted its FY 2013 Federal Activities Inventory Reform 

Act (FAIR Act) Inventory to OMB in June 2013. The Inventory identified 71 of the agency‟s 

132 FTEs as commercial activity FTEs. No challenges to its commercial inventories have ever 

been received.

Improved Financial Performance - For the tenth straight year, the FMC received an 

unqualified opinion on its financial statements in FY 2013. The FMC will continue to strive to 

achieve unqualified audit opinions.

Expanded E-Government - The FMC continues to expand electronic government (egovernment). During FY 2013, improvements were made to the quality, clarity, and 

accessibility of information provided to the shipping public via a redesigned website. A new 

website search engine was implemented that significantly improved the site‟s usability for online 

searches – this initiative had no associated cost, as an existing GSA contract was leveraged. In 

addition, a new ZIP code geo-search tool was developed and launched to help the shipping 

public locate FMC-licensed and bonded ocean transportation intermediaries.
Chapter One Management’s Discussion and Analysis

10

During FY 2013, the Commission prepared the 2014-2018 Information Resources Management 

(IRM) Strategic Plan in support of the Strategic Plan covering the same time period. The IRM 

plan describes how IRM activities help accomplish agency missions, and ensure IRM decisions 

are integrated with organizational planning, budget, procurement, financial management, human 

resources management, and program decisions. A major element of the plan is to significantly 

upgrade internal IT systems through the implementation of an enterprise content management 

(ECM) solution to improve data support for all Commission programs and research projects, as 

well as make the stakeholder filing processes easier. 

Information technology capabilities were enhanced in a number of areas, including undergoing a 

multiyear transition to use ECM technology for managing business activities and information 

needs. Important IT activities included completing a requirements review and planning to 

determine technology requirements for the adoption of an ECM solution to consolidate the 

Commission‟s fractured information applications and technology systems; completing the FMC18 Application system enhancements and enterprise data store; migrating/converting staff to a 

new cloud-based email and collaborative service; and completing business process reengineering 

assessment to identify requirements for the transition to ECM-based tools for records/document 

management, workflow and content management and collaboration. 

Performance Improvement – The Strategic Plan continues to represent the fundamental 

framework for the agency‟s planning and budgeting activities. Funding and Full-time Equivalent 

(FTE) levels are integrated into the agency‟s performance budget planning document by strategic 

goal, to identify clearly the budgetary and staff resources that are committed to each goal.
Chapter One Management’s Discussion and Analysis

11

Financial Performance Overview

The FMC‟s financial condition as of September 30, 2013 is sound, and the Commission has 

sufficient internal controls in place to ensure its budget authority is not exceeded and that funds 

are utilized efficiently and effectively. The FMC‟s accounting services provider, the Bureau of 

the Fiscal Services (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 FMC in accordance with Generally Accepted Accounting Principles (GAAP) 

recognized in the USA, standards approved by the Federal Accounting Standards Advisory 

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

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 2013 appropriations for the FMC in the amount of 

$24,100,000 through P.L. 113-6. In accordance with a sequestration order pursuant to the 

Balanced Budget and Emergency Deficit Control Act of 1985, as amended, the FMC‟s funding 

level was reduced by $1,212,375. Funding was further reduced by $48,200 through a rescission 

of funds, resulting in a final funding level of $22,839,425, which is a reduction of $1,260,575 

below the FY 2012 appropriation level. Additionally, the Commission had reimbursable budget 

authority of $20,500 for work performed by FMC staff at other government entities. 

Although the FMC collects remittances for user fees and penalties, the agency is not authorized 

to offset any of its budget authority by utilizing these funds. Collections are deposited directly 

into the Treasury General Fund. This information is captured in the Statement of Custodial 

Activity which can be found in Chapter Three, Auditor’s Reports and Financial Statements.

Appropriation History
Chapter One Management’s Discussion and Analysis

12

Full-time Equivalent History

The FMC‟s Full-time Equivalent (FTE) level is largely driven by our annual appropriation level; 

however, unanticipated vacancies in such offices as the Offices of the Commissioners have 

sometimes remained unfilled for lengthy periods of time, awaiting Presidential and 

Congressional action. The FMC has maintained a full complement of Commissioners since 

June, 2011. 

The FTE level declined annually from 2004 through 2008, followed by increases in 2009 

through 2011. In 2012, the Commission‟s FTE level dropped and in 2013, it dropped further, 

mirroring our 2007 FTE level. The agency has endeavored to develop the appropriate mix of 

staffing and other available means to ensure effective accomplishment of our mission. 
Chapter One Management’s Discussion and Analysis

13

Uses of Funds by Expense Category

During FY 2013, obligations against the post sequestration/rescission appropriation totaled 

$22,829,174, representing 99.96% of the funding level. The Commission spent $22.829 million 

as follows: 75.6% for salaries and benefits, .4% for official travel expenses, and 24% for 

administrative expenses (e.g., rent, government and commercial contracts, telephones, printing, 

and supplies). The unobligated balance of $10,251 will remain available for legitimate increases 

to existing FY 2013 obligations. 

17,254

103

5,472

17,564

204

6,245

$ 0

$5,000

$10,000

$15,000

$20,000

FY 2013 FY 2012

Salaries & Expenses Travel Administrative

Utilization of Funds by Expense Categories

($000s)

Audit Results

The FMC again received an unqualified opinion on its FY 2013 financial statements from the 

auditing firm of Regis & Associates, P.C. under contract through the FMC‟s OIG. Comparative 

statements are located in Chapter Three, Auditor’s Reports and Financial Statements.
Chapter One Management’s Discussion and Analysis

14

Financial Statement Highlights

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

operations of the Commission pursuant to the requirements of 31 U.S.C. 3515(b). While the 

statements have been prepared from the books and records of the Commission in accordance 

with 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 realization that they are for a component of the U.S. 

Government, a sovereign entity. One implication of this is that liabilities cannot be liquidated 

without legislation that provides resources to do so. 

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 Chapter Three, Auditor’s Report and Financial 

Statements. A brief analysis of the principal statements follows.

Summary of Assets

The FMC‟s assets were $2,966,646 as 

of September 30, 2013. This 

represents a decrease from FY 2012 of 

$1,712,352. The FMC‟s assets 

reported in the balance sheet are 

summarized in the accompanying 

table. 

The Fund Balance with Treasury of 

$2,620,747 represents the FMC‟s 

largest asset and represents 88.3% of 

the agency‟s total assets. This is a 

decrease of $1,633,897 from FY 2012. 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, 2013 was $273 for outstanding receivables billed to 

non-Federal entities. This accounts for .01 % of the FMC‟s total assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 11.6% of the 

FMC‟s total assets as of September 30, 2013. The net value of $345,626 accounts for the 

depreciation of all assets and represents the current book value of those assets.

FY 2013 FY 2012

Fund Balance with Treasury $2,620,747 $4,254,644

Accounts Receivable $273 $4,031

Capital Assets $345,626 $420,323

Other $0 $0

Total Assets $2,966,646 $4,678,998

Summary of Assets as of 

September 30, 2013
Chapter One Management’s Discussion and Analysis

15

Summary of Liabilities

The FMC‟s Liabilities totaled $2,057,119 as 

of September 30, 2013, a decrease of 

$721,735 total liabilities from FY 2012. 

The majority of the decrease is related to a 

reduction in accrued liabilities for payroll 

and unfunded leave. 

The FMC‟s accounts payable as of 

September 30, 2013 was $383,966. This 

represents the funds owed for goods and 

services received from vendors. Federal 

employee benefits represent accrued 

salaries and liabilities that are not funded by 

budgetary resources. These liabilities 

represent future workers‟ compensation and accrued annual leave that remains on the books. The 

Federal budget process does not recognize future benefits for today‟s employees; however, these 

liabilities will be recognized in future budget cycles as they are paid.

Analysis of Changes in Net Position Summary

The Changes in Net Position Summary reports the change in the agency‟s net position during the 

reporting period. The statement is a summary of two factors, Unexpended Appropriations - the 

amount of spending authority that remains unused at the end of the fiscal year and Cumulative 

Results of Operations - the cumulative excess of financing resources over expenses. The total 

net position for FY 2013 is a decrease of $990,617 from FY 2012. The decrease is attributed to a 

reduction in imputed financing sources as well as reduced funds availability due to reductions 

from sequestration and rescission.

Net position is the residual difference 

between assets and liabilities and is 

comprised of Unexpended 

Appropriations and Cumulative Results 

of Operations. Unexpended 

Appropriations represent the amount of 

unobligated and unexpended budget 

authority. Unobligated balances are the 

amount of appropriations or other 

authority remaining after deducting the 

cumulative obligations from the amount 

available for obligation. The 

Cumulative Results of Operations is the net result of FMC‟s operations of all active fiscal years.

FY 2013 FY 2012

Accounts Payable $383,966 $378,498

Payroll Taxes $104,709 $215,623

Federal Employee Benefits $7,112 $6,234

Custodial Liabilities $273 $256

Accrued Liabilities $1,561,059 $2,178,243

Total Liabilities $2,057,119 $2,778,854

Summary of Liabilities as of 

September 30, 2013

FY 2013 FY 2012

Unexpended Appropriations $1,820,115 $2,759,038

Cumulative Results of Operation ($910,588) ($858,894)

Total Net Position $909,527 $1,900,144

Changes in Net Position Summary as of

September 30, 2013
Chapter One Management’s Discussion and Analysis

16

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 

four agency programs are Operational 

and Administrative, Formal 

Proceedings, Inspector General and 

Equal Employment Opportunity. 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 

Chapter Three, Auditor’s Report and 

Financial Statements. 

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 Chapter Three, 

Auditor’s Report and Financial 

Statements. During FY 2013, the FMC 

had total budgetary resources available 

of $23,593,181, representing a decrease 

of $1,830,553 below 2012. The FMC incurred total obligations during FY 2013 of $23,007,870. 

The budgetary resources represent financial activity during the accounting period for the five 

active fiscal years.

FY 2013 FY 2012

Operational and Administrative $16,102,932 $16,866,478

Formal Proceedings $7,603,646 $7,374,383

Office of the Inspector General $614,320 $730,573

Office of Equal Employment 

Opportunity $195,312 $193,612

Total Net Cost $24,516,210 $25,165,046

Net Cost Summary as of 

September 30, 2013

FY 2013 FY 2012

Total Budgetary Resources $23,593,181 $25,423,734

Obligations Incurred $23,007,870 $24,138,684

Unobligated Balance Unavailable $575,060 $1,198,398

Unobligated Balance Available $10,251 $86,652

Total Status of Budgetary Resources $23,593,181 $25,423,734

Statement of Budgetary Resources as of

September 30, 2013
Chapter One Management’s Discussion and Analysis

17

Systems, Controls, and Legal Compliance

This section provides information on FMC‟s compliance with the:

Federal Managers‟ Financial Integrity Act

Prompt Payment Act

Debt Collection Improvement Act

Biennial Review of User Fees

Performance Measure Summary

Inspector General Act

 

Federal Managers’ Financial Integrity Act

The Federal Managers‟ Financial Integrity Act (FMFIA) requires that agencies establish controls 

that reasonably ensure that obligations and costs comply with applicable law; assets are 

safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues and 

expenditures are properly recorded and accounted for. It requires the agency head to provide an 

assurance statement of the adequacy of management controls and conformance of financial 

systems with Government standards.

The Chairman has provided his annual assurance statement on the following page. This 

statement was based on various sources and included management knowledge gained from the 

daily operation of agency programs and reviews, discussions with the Managing Director and the 

Directors of the Offices of Budget and Finance and Management Services, audits of financial 

statements, annual performance plans, and OIG reports, among other sources. Additionally, the 

Chairman meets regularly with, and receives regular reports from, the FMC‟s OIG. 

Management control deficiencies, when identified, are addressed at the highest management 

levels within the agency. For instance, any corrective actions for significant deficiencies 

identified in the agency‟s 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. Management and the OIG reached 

agreement on all recommendations made. At the conclusion of the fiscal year, management and 

the OIG agreed as to the actions that management needs to take on 18 recommendations from 

2013 and prior years. Management has taken action to close five of these recommendations, but 

the actions are pending review during FY 2014 before OIG closure.

Debt Collection Improvement Act of 1996

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

collect debts. The Act centralized the collection of non-tax delinquent debt owed to the 

government. The collection of delinquent debts is conducted by the Financial Management 

Service through the Treasury Offset Program where the names and taxpayer identification 

numbers (TIN) 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. 
Chapter One Management’s Discussion and Analysis

18

All Office of Personnel Management (OPM) retirement, vendor, Internal Revenue Service 

refunds, Social Security benefits, and some Federal salary payments are being offset. Federal 

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

collection. The goal of the FMC is to minimize the amount of delinquent debt owed to the 

agency. 

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 2013, the FMC maintained a percentage 

of on-time payments of 99%.

In FY 2013, the FMC paid no interest payments. The FMC will continue to strive towards 

maintaining 100% on-time vendor payments in future years.

Biennial Review of User Fees

The Chief Financial Officers Act requires agencies to conduct biennial reviews of fees and other 

charges imposed by agencies, and to make revisions to cover program and administrative costs 

incurred. During FY 2008, the Commission completed its biennial review of user fees. The OIG 

subsequently conducted a review of the methodology used to calculate the updated user fees.

A revised methodology for calculating user fees was developed in FY 2011. Performance goals 

and processing times for completion of certain user fee activities changed dramatically since the 

review was performed, and in FY 2012, management requested updated information from 

bureaus and offices on current processing times for all user fee activities in order to calculate 

user fees which accurately reflected the agency‟s costs. In late FY 2013, a working group was 

formed to re-examine all user fees and initiate a rulemaking proceeding to address their update. 

It is anticipated that updated user fees will be implemented during FY 2014. 

Performance Measure Summary

The FMC does not have an in-house financial accounting system, and as a small agency 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 Bureau of Fiscal 

Services. The Commission verifies and reconciles all financial statements and reports prior to 

submission, and has remained in compliance with all reporting thresholds. 
Chapter One Management’s Discussion and Analysis

19

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. 

Briefly, during FY 2013, the Inspector General completed the following audits and reviews:

• Audit of the FMC‟s Transit Benefit Program

• Evaluation of the FMC‟s FY 2012 Privacy and Data Protection

• Evaluation of the FMC‟s Compliance with the Federal Information 

Security Management Act FY 2012

• Independent Auditor‟s Report of FMC‟s FY 2012 Financial Statements

• FY 2012 Financial Statement Management Letter

The Inspector General‟s reviews disclosed no instances of questioned costs. The agency 

addressed a number of recommendations from these reviews, and it is expected that progress will 

be made to address the remaining open recommendations during FY 2014. 

During FY 2013, no significant deficiencies were identified. 
Chapter One Management’s Discussion and Analysis

20

CHAIRMAN’S FMFIA STATEMENT OF ASSURANCE

The Federal Maritime Commission‟s (FMC) management is responsible for establishing and 

maintaining an effective internal control and financial management system that meets the 

objectives of the Federal Managers‟ Financial Integrity Act of 1982 (FMFIA).

In accordance with the requirements of the Office of Management and Budget (OMB) Circular 

A-123, Management’s Responsibility for Internal Control, the FMC conducted its annual 

assessment of the effectiveness of the organization‟s internal controls to support effective and 

efficient programmatic operations, reliable financial reporting, and compliance with applicable 

laws and regulations; and whether the financial management system conforms to applicable 

financial systems requirements.

Based on the results of this assessment, the FMC provides reasonable assurance, as of September 

30, 2013, that its internal controls over the effectiveness and efficiency of operations, reliable 

financial reporting and compliance with applicable laws and regulations were operating 

effectively and that no material weaknesses were found in the design or operation of our internal 

controls.

Further, based on our assessment, we determined that the financial management system acquired 

from the Bureau of Fiscal Services, an integrated, internet-based financial system using Oracle 

Federal Financials, conforms to applicable financial systems requirements.

Signed __/s/____________________

 Mario Cordero

 December 16, 2013
Chapter Two

PROGRAM PERFORMANCE

INFORMATION
Chapter Two Program Performance Information

22

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 2013 in furtherance of the Commission‟s mission to foster a fair, 

efficient and reliable international ocean transportation system and to protect the public from 

unfair and deceptive practices. The FMC‟s strategic goals and objectives are as follows:

Maintain an Efficient and Competitive International Ocean Transportation System.

Identify and take action to address substantially anti-competitive conduct or unfavorable 

conditions in U.S. trades.

Protect the Public from Unlawful, Unfair and Deceptive Ocean Transportation 

Practices and Resolve Shipping Disputes.

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.

The FMC quantitatively measured seven performance goals during the fiscal year. All measures 

reached and/or exceeded FY 2013 targets. Each measure, target, and actual result is reported in 

the summary table below (Table 1) and includes a description of the data used to measure 

performance along with an explanation of the measures in place to validate and ensure integrity 

of the reported result.

Trend data for measures in place since 2010 is reflected in Table 2 below. This data reflects 

continuous increases in agency efficiency and productivity – a result of both improved and 

streamlined processes, and enhanced focus on the critical processes being measured. Table 3 

provides a status update on unmet targets for FY 2009 through FY 2013.

The Strategic Plan was revised in FY 2011 to remove a third strategic goal and its associated 

objectives and measures. The third goal was established for administrative support functions 

such as human resources, information technology, and financial management. Each of these 

important functions is subject to its own stringent planning and measuring regimes pursuant to 

various laws and executive mandates. Those related plans support the strategic plan and are 

referenced and described therein.

The agency has forwarded this report to the President, with a copy to the Director of OMB, and 

appropriate Congressional committees. Additionally, this report has been placed on the FMC‟s 

Internet website to ensure that it is accessible to interested parties. All Commission employees 

have been advised to review this report.
Chapter Two Program Performance Information

23

Table 1: Summary of Performance Measure Results – FY 2013

Targeted performance compared to actual results.

Strategic Goal No. 1: Maintain an efficient and competitive

international ocean transportation system.

Performance Measure FY 2013

Target

FY 2013

Actual

Measure: Percentage share of total U.S. international oceanborne trade moved 

by containership as an indicator of liner shipping efficiency.

2013 Target: 19.5%

Validation: This outcome goal is measured by using data received from the 

United States Census Bureau‟s trade database, USA Trade Online, at 

www.usatradeonline.gov . Monthly aggregates of “Containerized Vessel” and 

“Total Vessel” standard weight in Kg for Imports and Exports were run and 

downloaded into MS Excel from the Harmonized System (HS) Port-level Data.

The monthly values for Imports and Exports were then combined and aggregated 

for FY 2013. The percentage share of total U.S. international oceanborne trade 

moved by containership is calculated as the “Containerized Vessel” weight 

divided by “Total Vessel” weight, multiplied by 100.

19.5% 19.5%

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

transportation practices and resolve shipping disputes.

Performance Measure FY 2013

Target

FY 2013

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.

2013 Target: 76%

Validation: This outcome goal is measured by examining the 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.

76% 78.9%

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.

2013 Target: 75%

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% 87.6%

Measure: Percentage of cruise line operators examined during the year that have 

the full financial coverage required by regulation to protect against loss from nonperformance or casualty.

2013 Target: 93%

Validation: This outcome goal is measured by comparing reported financial 

coverage amounts against required coverage amounts. Approximately 200 cruise 

93% 100%
Chapter Two Program Performance Information

24

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 key Commission issuances, orders and reports that are 

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

2013 Target: 76%

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.

76% 86%

Measure: Number of cases opened and closed each fiscal year using ombuds and 

ADR services assisting consumers to recover goods or funds.

2013 Target: 800

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

Commission on each such case opened and closed.

800 800

Measure: Percentage of formal complaints or Commission initiated orders of 

investigation completed within two years of filing or Commission initiation.

2013 Target: 56%

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

by the Commission. 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.

56% 91%
Chapter Two Program Performance Information

25

Table 2: Performance Measure Trends FY 2010-2013

Strategic Goal No. 1: Maintain an efficient and competitive international ocean transportation system.

Performance Measure

FY 

2010

Target

FY 

2010

Actual

FY 

2011

Target

FY 

2011

Actual

FY 

2012

Target

FY 

2012

Actual

FY 

2013

Target

FY 

2013

Actual

Measure: Percentage share of total U.S. 

international ocean borne trade moved by 

containership as an indicator of liner 

shipping efficiency.

18% 17.4% 18.5% 17.9% 19% 18.7% 19.5% 19.5%

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

and resolve shipping disputes.

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.

70% 72.9% 72% 82% 74% 88% 76% 78.9%

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.

55% 65% 60% 77% 70% 90.2% 75% 87.6%

Measure: Percentage of cruise line 

operators examined during the year that 

have the full financial coverage required 

by regulation to protect against loss from 

non-performance or casualty.

90% 90 % 91% 91% 92% 100% 93% 100%

Measure: Percentage of attendees at 

agency sponsored outreach presentations 

that rate the program as “Useful” or 

“Extremely Useful” in their compliance 

efforts.

70% 100% 75% N/A* N/A* N/A* N/A* N/A*

Measure: Percentage of key 

Commission issuances, orders and reports 

that are available through the 

Commission‟s website within 5 working 

days of receipt.

70% 77.1% 72% 72% 74% 79% 76% 86%

Measure: Number of cases opened and 

closed each fiscal year using ombuds and 

ADR services assisting consumers to 

recover goods or funds.

550 556 625 631 700 893 800 800

Measure: Percentage of formal 

complaints or Commission initiated 

orders of investigation completed within 

two years of filing or Commission 

initiation.

50% 56% 52% 60% 54% 73% 56% 91%

* In consultation with OMB, this outcome goal was removed for FY 2011 – 2015: “Percentage of attendees at agency sponsored 

outreach presentations that rate the program as „Useful‟ or „Extremely Useful‟ in their compliance efforts.” The measure is not 

reflective of current agency outreach practices. It also proved logistically difficult to execute because most outreach is performed 

by FMC staff as invitees at non-FMC sponsored events.
Chapter Two Program Performance Information

26

Table 3: Status of 2009 – 2012 Unmet Targets

Performance Measure (2009) FY 2009

Target

FY 2009

Actual

Measure: Percentage of complaints or investigations completed within two years of filing or Commission 

initiation beginning with cases filed or initiated in FY 2007. Strategic Goal 1: Efficient Regulatory 

Process (2009) Report Status Update: This measure is no longer tracked. A similar measure tracking 

successful resolution of enforcement actions has exceeded targets in 2010 and 2011.

60% 55%

Measure: Percentage of Active Electronic Docket Logs updated within 72 hours of receipt of key 

documents issued or filed in Commission proceedings. Strategic Goal 1: Efficient Regulatory Process 

(2009) Report Status Update: This measure is no longer tracked, but a similar measure tracking web 

accessibility of filings and issuances has met targets in both 2010 and 2011.

85% 55%

Measure: Percentage of minutes and monitoring reports received within regulatory deadlines or formal 

extension. Strategic Goal 2: Compliance (2009) 2009 Report Status Update: Measure no longer tracked. 95% 72-91%

Measure: Percentage of new and amended OTI applications that are processed with 45 days. Strategic 

Goal 2: Compliance (2009) Report Status Update: The measure of the percentage of OTI applications 

completed within 45 calendar days for FY 2009 was updated in the FY 2010 – 2015 Strategic Plan to 90 

business days. The measure exceeded the target in FY 2010. BCL is now tracking OTI licensing with a

target of 60 calendar days and exceeded that target in FY 2011.

80% 5%

Measure: Number of investigations opened to address alleged harm to the public as a result of Shipping 

Act violations. Strategic Goal 2: Compliance (2009) Status Report Update: Measure no longer tracked. 50 34

Measure: The number of technology solutions that are designed and implemented and used by the 

Commission to facilitate process improvement through the use of databases and record keeping systems.

Strategic Goal 4: Technological Efficiencies (2009) Report Status Update: Measure no longer tracked.

6 0

Measure: Cumulative number of technology solutions that are designed and implemented and used by the 

Commission to facilitate process improvement through the use of databases and record keeping systems 

since FY 2007 (including current fiscal year). Strategic Goal 4: Technological Efficiencies (2009)

Report Status Update: Measure no longer tracked.

12 0

Measure: Number of technology-related programs and systems developed or implemented that achieve 

full compliance with Federal information security mandates. Strategic Goal 4: Technological Efficiencies 

(2009) Report Status Update: Measure no longer tracked.

12 2

Measure: Number of awareness, recruitment, training, new-employee orientation, workforce 

development, and quality of life initiatives offered to agency employees. Strategic Goal 5: Management 

Capabilities (2009) Report Status Update: Measure no longer tracked.

250 216

Measure: Percent of payments (user fees, penalties, etc.) received electronically via Pay.gov versus older 

technologies (e.g., checks). Strategic Goal 5: Management Capabilities (2009) Report Status Update: 

Measure no longer tracked.

25% 0

Measure: Received “unqualified opinion” from financial statement auditors with respect to the current 

fiscal year. Strategic Goal 5: Management Capabilities (2009) Report Status Update: FY 2009, the 

audit was complete in November 2009 and received “unqualified audit opinion.” Measure no longer 

tracked.

Yes Not 

available

Performance Measure (2010) FY 2010

Target

FY 2010

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership as an 

indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient Competitive 

International Ocean Transportation System (2010)

18% 17.4%

Performance Measure (2011) FY 2011

Target

FY 2011

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership as an 

indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient Competitive 

International Ocean Transportation System (2011)

18.5% 17.9%

Performance Measure (2012) FY 2012

Target

FY 2012

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership as an 

indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient Competitive 

International Ocean Transportation System (2012)

19% 18.7%
Chapter Three

FINANCIAL INFORMATION
Chapter Three Financial Information

28

Message from the Chief Financial Officer

I am pleased to report that in fiscal year 2013, the FMC maintained its record of strong fiscal 

stewardship on behalf of the American people. For the tenth consecutive year, independent 

auditors gave us an unqualified (clean) opinion on our financial statements. Our auditors also 

stated for the controls they tested, they found no material weaknesses, significant control 

deficiencies, or nonconformances with the Federal Managers‟ Financial Integrity Act and other 

applicable laws and regulations. 

This unqualified opinion on the FMC‟s financial statements highlights for the President, the 

Congress, and the American people the continuing commitment of this agency to maintain sound 

financial management of the resources entrusted to us. This attests to the FMC‟s high standards 

and commitment to high quality financial management. The FMC‟s financial condition is sound, 

and the Commission has sufficient internal controls in place to ensure its budget authority is not 

exceeded and that funds are utilized efficiently and effectively. 

During FY 2013, the FMC continued its focus on internal controls, as mandated by OMB 

Circular A-123. Our financial management staff is to be highly commended for consistently 

finding ways to provide budget information in concise, reliable, and understandable formats. In 

2013, other notable accomplishments include completing corrective actions on a number of audit 

recommendations, maintaining an internal control environment through developing and 

maintaining appropriate guidance and training for staff, sustaining a green rating from the 

Department of the Treasury on the accuracy and timeliness of financial reporting practices 

involving Fund Balance with Treasury transactions, and paying 98.8 percent of all invoices 

received from vendors on time. Quarterly financial statements were issued 15 days after the end 

of each quarter, and our FY 2013 PAR is being published on December 16, 2013.

I wish to acknowledge the diligent efforts of our staff and financial service provider for their 

dedication to the FMC‟s mission and their efforts in maintaining an unqualified opinion on our 

financial statements. Even as financial oversight and accountability requirements grow more 

complex and challenging, the FMC is steadfastly committed to improving financial management 

and producing accurate and reliable financial statements. While pleased with our FY 2013 

accomplishments, we will strive to improve all aspects of financial performance and to maintain 

high financial management standards in FY 2014. We are committed to promoting effective 

internal controls and resolving any impediments to assure fairly presented financial statements 

and improve the auditor‟s ability to issue an unqualified audit opinion next year.

Sincerely,

/s/

Vern W. Hill

Chief Financial Officer

December 16, 2013
Chapter Three Financial Information

29

PRINCIPAL STATEMENTS - LIMITATIONS OF THE FINANCIAL 

STATEMENTS

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

operations of the FMC, pursuant to the requirements of the Chief Financial Officers Act of 1990, 

as amended by the Government Management Reform Act of 1994. These statements have been 

prepared from the books and records of the FMC in accordance with the formats prescribed by 

the Office of Management and Budget. However, these statements differ from the financial 

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

and records. The principal statements should be read with the realization they are for a 

component of the U.S. government, a sovereign entity. 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 Regis & Associates, 

PC, under contract to the FMC‟s Office of the Inspector General.
Chapter Three Financial Information

30

FEDERAL MARITIME COMMISSION

Washington, DC 20573

December 12, 2013

Office of Inspector General

Dear Chairman Cordero and Commissioners:

I am pleased to provide you with the attached audit report required by the Accountability 

for Tax Dollars Act of 2002 (ATDA), which presents an unqualified (clean) opinion on the 

Federal Maritime Commission‟s (FMC) fiscal year (FY) 2013 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 unqualified 

opinion.

The OIG contracted with the independent certified public accounting firm of Regis & 

Associates, P.C. (Regis) to perform the audit of the FMC‟s financial statements for the fiscal year 

ended September 30, 2013; 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 Federal Maritime Commission, Regis found: the financial statements 

were fairly presented, in all material respects, in conformity with U.S. generally accepted 

accounting principles; there were no material weaknesses in internal control over financial 

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

Regis & Associates is responsible for the attached auditor‟s report and the conclusions 

expressed in the report. The OIG does not express opinions on FMC‟s financial statements or 

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

Respectfully submitted,

/Jon Hatfield

Interim Inspector General

Enclosure
Chapter Three Financial Information

31

Independent Auditor’s Report

REPORT ON THE FINANCIAL

STATEMENTS AUDIT

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2013 and 2012

MANAGEMENT CONSULTANTS &

CERTIFIED PUBLIC ACCOUNTANTS
Chapter Three Financial Information

32

REPORT ON THE FINANCIAL

STATEMENTS AUDIT

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2013 and 2012

TABLE OF CONTENTS

Independent Auditors' Report .......................................................................................... 1-4

Balance Sheet.......................................................................................................................5

Statement of Net Cost ..........................................................................................................6

Statement of Changes in Net Position .................................................................................7

Statement of Budgetary Resources......................................................................................8

Statement of Custodial Activity...........................................................................................9

Notes to Financial Statements............................. ......................................................... 10-21

Agency Comments on Draft Audit Report (Appendix A).......................... ................. 22-23
Chapter Three Financial Information

33

MANAGEMENT CONSULTANTS &

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

The Honorable Mario Cordero

Chairman

Federal Maritime Commission

Washington, DC

The Accountability of Tax Dollars Act of 2002 made the Federal Maritime Commission subject 

to the annual financial statement reporting requirements of the Chief Financial Officers‟ Act of

1990, which requires agencies to report annually to Congress on their financial status; and any 

other information needed to fairly present the agencies‟ financial position and results of 

operations.

We have audited the accompanying balance sheet of the Federal Maritime Commission, as of 

September 30, 2013 and 2012, and the related statements of net cost, changes in net position, 

budgetary resources, and custodial activity, for the years then ended (hereinafter referred to as 

“financial statements” or “basic financial statements”). The objective of our audits was to 

express an opinion on the fair presentation of these financial statements. In connection with our 

fiscal year 2013 and 2012 audits, we also considered Federal Maritime Commission‟s internal 

control over financial reporting; and tested the agency's compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

financial statements.

Summary

As stated in our opinion on the financial statements, we concluded that Federal Maritime 

Commission‟s financial statements as of, and for the years ended, September 30, 2013 and 2012, 

are presented fairly, in all material respects, in conformity with U.S. Generally Accepted 

Accounting Principles.

Our consideration of internal control over financial reporting was not designed to identify all 

deficiencies in internal control over financial reporting that might be deficiencies, significant 

deficiencies, or material weaknesses. We did not identify any deficiencies in internal control 

over financial reporting that we consider to be material weaknesses, as defined in the Internal 

Control over Financial Reporting section of this report.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts 

disclosed no instances of noncompliance or other matters that are required to be reported herein 

under Government Auditing Standards, issued by the Comptroller General of the United States; 

and Office of Management and Budget (OMB) Bulletin Number (No.) 14-02, Audit 

Requirements for Federal Financial Statements.

The following sections discuss our opinion on Federal Maritime Commission‟s financial 

statements; our consideration of internal control over financial reporting; our tests of the 

agency‟s compliance with certain provisions of applicable laws, regulations, and contracts; and 

management‟s and our responsibilities.

1400 Eye Street, NW, Suite 425, Washington, DC 20005 Tel 202-296-7101 Fax 202-296-7284
Chapter Three Financial Information

34

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Federal Maritime Commission as of 

September 30, 2013 and 2012, and the related statements of net cost, changes in net position, 

budgetary resources, and custodial activity for the years then ended.

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

the financial position of Federal Maritime Commission as of September 30, 2013 and 2012, and 

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

then ended, in conformity with U.S. Generally Accepted Accounting Principles.

Report on Internal Control over Financial Reporting

In planning and performing our audit of the financial statements of Federal Maritime 

Commission as of, and for the year ended, September 30, 2013 and 2012, in accordance with 

auditing standards generally accepted in the United States of America, we considered Federal 

Maritime Commission‟s internal control over financial reporting (internal control) as a basis for 

designing audit procedures that are appropriate in the circumstances for the purpose of 

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

opinion on the effectiveness of Federal Maritime Commission‟s internal control. We limited our 

internal control testing to those controls necessary to achieve the objectives described in OMB 

Bulletin No. 14-02. We did not test all internal controls relevant to operating objectives, as 

broadly defined by the Federal Managers’ Financial Integrity Act of 1982, such as those

controls relevant to ensuring efficient operations. The objective of the audit was not to provide 

assurance on internal control or on the effectiveness on Federal Maritime Commission‟s internal 

control. Accordingly, we do not express an opinion on the effectiveness of the Federal Maritime 

Commission‟s internal control.

Our consideration of internal control was for the limited purpose described in the preceding 

paragraph, and was not designed to identify all deficiencies in internal control that might be 

material weaknesses or significant deficiencies; and therefore, material weaknesses or significant 

deficiencies may exist that were not identified.

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

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

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a 

deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable 

possibility that a material misstatement of the agency‟s financial statements will not be 

prevented, or detected and corrected, on a timely basis.

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

necessarily identify all deficiencies in internal control that might be significant deficiencies or 

material weaknesses. We did not identify any deficiencies in internal control that we consider to 

be material weaknesses, as defined above. The objective of our audit was not to provide 

assurance on these internal controls. Accordingly, we do not provide an opinion on such 

controls.
Chapter Three Financial Information

35

Report on Compliance with Applicable Provisions of Laws, Regulations, and Contracts

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

financial statements are free of material misstatements, we performed tests of compliance with 

selected provisions of applicable laws, regulations, and contracts; noncompliance with which 

could have a direct and material effect on the determination of financial statement amounts, and 

certain laws, regulations, and contracts specified in OMB Bulletin No. 14-02, except for those 

instances of noncompliance that in the auditor‟s judgment, are clearly inconsequential. We 

limited our tests of compliance to these provisions, and did not test compliance with all laws, 

regulations, and contracts applicable to the Federal Maritime Commission.

The results of our tests of compliance with laws, regulations, and contracts disclosed no instance 

of noncompliance that would be reportable under U.S. Generally Accepted Government

Auditing Standards, or OMB audit guidance.

Providing an opinion on compliance with laws, regulations and contracts was not an objective of 

our audit, and accordingly, we do not express such an opinion.

Responsibilities

Management's Responsibilities: Management is responsible for the financial statements; 

establishing and maintaining effective internal control over financial reporting; preparing the 

Management Discussion and Analysis (MD&A) and Required Supplementary Information 

(RSI); and complying with laws, regulations, and contracts applicable to Federal Maritime 

Commission.

Auditors' Responsibilities: Our responsibility is to express an opinion on the fiscal year 2013 

and 2012 financial statements of Federal Maritime Commission, based on our audits. We 

conducted our audits in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits, contained in Government 

Auditing Standards, issued by the Comptroller General of the United States; and OMB Bulletin 

No. 14-02. Those standards and OMB Bulletin No. 14-02, require that we plan and perform the 

audits to obtain reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes consideration of internal control over financial reporting as a 

basis for designing audit procedures that are appropriate in the circumstances, but not for the 

purpose of expressing an opinion on the effectiveness of Federal Maritime Commission‟s 

internal control over financial reporting. Accordingly, we express no such opinion.

An audit also includes:

Examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements;

Assessing the accounting principles used, and significant estimates made by 

management; and

Evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.
Chapter Three Financial Information

36

Other Accompanying Information

Accounting principles generally accepted in the United States of America, and Government 

Auditing Standards, issued by the Comptroller General of the United States require that the other 

accompanying information included in the Required Supplementary Information (RSI) section of 

the Performance and Accountability Report, be presented to supplement the basic financial 

statements. Such information, although not a part of the basic financial statements, is required

by the Federal Accounting Standards Advisory Board, OMB Bulletin 14-02; and OMB Circular 

A-136, revised, Financial Reporting Requirements, which consider it to be an essential part of 

financial reporting for placing the basic financial statements in an appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the Management 

Discussion and Analysis (MD&A); and Required Supplementary Information, in accordance 

with auditing standards generally accepted in the United States of America, which consisted of 

inquires of management about the methods of preparing the information; and comparing the 

information for consistency with management‟s responses to our inquiries, the basic financial 

statements, and other knowledge we obtained during our audit of the basic financial statements. 

We do not express an opinion or provide any assurance on the information because the limited 

procedures do not provide us with sufficient evidence to express an opinion or provide any 

assurance.

This report is intended solely for the information and use of those charged with governance and 

management of the Federal Maritime Commission, others within the organization, the Office of 

Inspector General, OMB, the U.S. Government Accountability Office, and the U.S. Congress; 

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

Agency Comments and Our Evaluation

The Federal Maritime Commission concurred with the facts and conclusions in our report. See

Appendix A.

Regis & Associates, PC

Washington, DC 

December 2, 2013
FEDERAL MARITIME COMMISSION

37

Assets:

2013 2012

Intragovernmental:

Fund Balance With Treasury (Note 2) $ 2,620,747 $ 4,254,644 

Total Intragovernmental 2,620,747 $ 4,254,644

Accounts Receivable, Net (Note 3)

Property, Equipment, and Software, Net (Note 4)

273

345,626 

4,031

420,323 

Total Assets $ 2,966,646 $ 4,678,998

Liabilities:

Accounts Payable $ 150,929 $ 201,490

Employer Contributions and Payroll Taxes Payable (Note 5) 74,318 191,260

Unfunded FECA Liability (Note 5) 200 324

Custodial Liability (Note 5) 273 256 

Total Intragovernmental $ 225,720 $ 393,330

Accounts Payable 233,037 177,008

Federal Employee and Veterans' Benefits (Note 5) 6,912 5,910

Accrued Liabilities 311,832 901,485

Employee Contributions and Payroll Taxes Payable (Note 5) 30,391 24,363

Unfunded Leave (Note 5) 1,249,227 1,276,758 

Total Liabilities $ 2,057,119 $ 2,778,854 

Net Position:

Unexpended Appropriations - Other Funds $ 1,820,115 $ 2,759,038

Cumulative Results of Operations - Other Funds (910,588) (858,894)

Total Net Position $ 909,527 $ 1,900,144

Total Liabilities and Net Position $ 2,966,646 $ 4,678,998

BALANCE SHEET

AS OF SEPTEMBER 30, 2013 AND 2012 

(IN DOLLARS)

Intragovernmental:
FEDERAL MARITIME COMMISSION

38

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012 

(IN DOLLARS)

2013 2012

Gross Program Costs:

Operational and Administrative Gross Costs $ 16,102,932 $ 16,908,154

Less: Earned Revenue - (41,676)

Net Program Costs $ 16,102,932 $ 16,866,478

Formal ProceedingsGross Costs $ 7,603,646 $ 7,374,383

Net Program Costs $ 7,603,646 $ 7,374,383

Office of Inspector General Gross Costs $ 634,730 $ 743,557

Less: Earned Revenue (20,410) (12,984)

Net Program Costs $ 614,320 $ 730,573

Office of Equal Employment Opportunity Gross Costs $ 195,312 $ 193,612

Net Program Costs $ 195,312 $ 193,612

Net Cost of Operations(Note 8) $ 24,516,210 $ 25,165,046
FEDERAL MARITIME COMMISSION

39

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012 

(IN DOLLARS)

Cumulative Results of Operations:

2013 2012

Beginning Balances $ (858,894) $ (712,825)

Budgetary Financing Sources:

Appropriations Used

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 9)

23,046,477

1,418,039

23,560,395

1,458,582

Total Financing Sources 24,464,516 25,018,977

Net Cost of Operations (24,516,210) (25,165,046)

Net Change (51,694) (146,069)

Cumulative Results of Operations $ (910,588) $ (858,894)

Unexpended Appropriations:

Beginning Balances $ 2,759,038 $ 2,378,313

Budgetary Financing Sources:

Appropriations Received 24,100,000 24,100,000

Other Adjustments (1,992,446) (158,880)

Appropriations Used (23,046,477) (23,560,395)

Total Budgetary Financing Sources (938,923) 380,725

Total Unexpended Appropriations $ 1,820,115 $ 2,759,038

Net Position $ 909,527 $ 1,900,144
40

STATEMENT OF BUDGETARY RESOURCES

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012

(IN DOLLARS)

2013 2012

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 

Recoveries of Prior Year Unpaid Obligations 

Other changes in unobligated balance

 $ 1,285,050

 228,121

 (783,029)

 $ 1,245,904

 182,051

 (158,881)

 Unobligated balance from prior year budget authority, net 730,142 1,269,074

 Appropriations (discretionary and mandatory) 22,839,425 24,100,000

 Spending authority from offsetting collections 23,614 54,660

Total Budgetary Resources $ 23,593,181 $ 25,423,734

Status of Budgetary Resources:

 Obligations Incurred (Note 11) $ 23,007,870 $ 24,138,684

 Unobligated balance, end of year:

Apportioned 10,251 86,652

Unapportioned 575,060 1,198,398

 Total unobligated balance, end of year 585,311 1,285,050

Total Budgetary Resources $ 23,593,181 $ 25,423,734

Change in Obligated Balance

 Unpaid Obligations:

 Unpaid Obligations, Brought Forward, October 1 $ 2,969,594 $ 2,546,766

 Obligations Incurred (Note 11) 23,007,870 24,138,684

 Outlays (gross) (23,713,907) (23,533,805)

 Recoveries of Prior Year Unpaid Obligations (228,121) (182,051)

 Unpaid Obligated Balance, End of Year $ 2,035,436 $ 2,969,594

Budget Authority and Outlays, Net:

 Budget authority, gross $ 22,863,039 $ 24,154,660

 Actual offsetting collections (23,614) (54,660)

 Budget Authority, net $ 22,839,425 $ 24,100,000

 Outlays, gross $ 23,713,907 $ 23,533,806

 Actual offsetting collections (23,614) (54,660)

 Outlays, net 23,690,293 23,479,146

 Distributed Offsetting Receipts (2,816,990) 664,935

 Agency outlays, net $ 20,873,303 $ 24,144,081
41

STATEMENT OF CUSTODIAL ACTIVITY

FEDERAL MARITIME COMMISSION

AS OF SEPTEMBER 30, 2013 AND 2012

STATEMENT OF CUSTODIAL ACTIVITY

(IN DOLLARS)

2013 2012

Revenue Activity:

Sources of Cash Collections: 

Miscellaneous $ 3,319,566 $ 1,006,298

Total Custodial Revenue (Note 13) 3,319,566 1,006,298

Disposition of Collections: 

Transferred to Others (by Recipient) 3,319,566 1,006,298

Net Custodial Activity $ - $ -
42

FEDERAL MARITIME COMMISSION 

NOTES TO THE FINANCIAL STATEMENTS 

SEPTEMBER 30, 2013

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity

The Federal Maritime Commission (FMC) was established as an independent regulatory agency 

on August 12, 1961. The FMC is responsible for the regulation of ocean borne transportation in 

the foreign commerce of the United States (U.S.). The principal statutes or statutory provisions 

administered by the FMC are the Shipping Act of 1984, as amended by the Ocean Shipping 

Reform Act (OSRA) 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 FMC monitors the activities of ocean common carriers, marine terminal operators (MTOs), 

agreements among ocean common carriers and/or MTOs, ports and ocean transportation 

intermediaries (OTI), and (non-vessel-operating common carriers and ocean freight forwarders) 

operating in the U.S. foreign commerce to ensure they maintain just and reasonable practices; 

maintains trade monitoring, enforcement and dispute resolution programs designed to assist 

regulated entities in achieving compliance and to detect and remedy malpractices and violations 

of the 1984 Act; monitors the laws and practices of foreign governments which could have a 

discriminatory or otherwise adverse impact on shipping conditions in U.S. trades, and imposes 

remedial action, as appropriate, pursuant to section 19 of the 1920 Act or FSPA; enforces special 

regulatory requirements applicable to carriers owned or controlled by foreign governments; 

processes and reviews agreements, service contracts, and service arrangements pursuant to the

1984 Act for compliance with statutory requirements; and reviews common carriers‟ privately 

published tariff systems for accessibility and accuracy, as required by OSRA.

The FMC also issues licenses to qualified OTIs in the U.S., ensures that all OTIs are bonded or 

maintain other evidence of financial responsibility, and ensures that passenger vessel operators 

(PVOs) demonstrate adequate financial responsibility in case of nonperformance of voyages, or 

death or injury occurring to passengers.

The FMC is composed of five Commissioners, appointed for five-year terms by the President, 

with the advice and consent of the Senate. The President designates one of the Commissioners to 

serve as Chairman, who is the chief executive and administrative officer of the FMC.

The FMC reporting entity is comprised of General Funds and General Miscellaneous Receipts. 

General Funds are accounts used to record financial transactions arising under congressional

appropriations or other authorizations to spend general revenues.

General Fund Miscellaneous Receipts are accounts established for receipts of nonrecurring 

activity, such as fines, penalties, fees, and other miscellaneous receipts for services and benefits.

The accompanying notes are an integral part of these financial statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

43

The FMC makes custodial collections and holds custodial receivables that are non-entity assets, 

which are transferred to Treasury at fiscal year end.

The FMC has rights and ownership of all assets reported in these financial statements. FMC does 

not possess any non-entity assets.

B. Basis of Presentation

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

operations of FMC. The Balance Sheet presents the financial position of the agency.

The Statement of Net Cost presents the agency‟s operating results; the Statement of Changes in 

Net Position displays the changes in the agency‟s equity accounts. The Statement of Budgetary 

Resources presents the sources, status, and uses of the agency‟s resources and follows the rules 

for the Budget of the United States Government.

The statements are a requirement of the Chief Financial Officers Act of 1990, the Government 

Management Reform Act of 1994, and the Accountability of Tax Dollars Act of 2002. 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.

FMC does not maintain bank accounts of its own, has no disbursing authority, and does not 

maintain cash held outside of Treasury. Treasury disburses funds for FMC on demand.
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

44

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 as expenses when the related goods and services are 

received.

H. Liabilities

Liabilities represent the amount of funds likely to be paid by the FMC as a result of transactions 

or events that have already occurred.

The FMC reports its liabilities under two categories, Intragovernmental and With the Public. 

Intragovernmental liabilities represent funds owed to another government agency. Liabilities 

with the Public represent funds owed to any entity or person that is not a Federal agency, 

including private sector firms and Federal employees. Each of these categories may include 

liabilities that are covered by budgetary resources and liabilities not covered by budgetary 

resources.
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

45

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. Nonvested 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, effective at 50%, beginning FY 2010; and 100% 

in 2014.

J. Accrued and Actuarial Workers’ Compensation

The FECA administered by the U.S. Department of Labor (DOL) addresses all claims brought by 

the FMC employees for on-the-job injuries. The DOL bills each agency annually as its claims are 

paid, but payment of these bills is deferred for two years to allow for funding through the budget 

process. Similarly, employees that the FMC terminates without cause may receive unemployment

compensation benefits under the unemployment insurance program also administered by the

DOL, which bills each agency quarterly for paid claims. Future appropriations will be used for

the reimbursement to DOL. The liability consists of the net present value of estimated future

payments calculated by the DOL.

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
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

46

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% of pay. For FERS participants, FMC also contributes the employer‟s matching 

share of Social Security.

FERS employees and certain CSRS reinstatement employees are eligible to participate in the 

Social Security program after retirement. In these instances, FMC remits the employer‟s share of 

the required contribution.

FMC recognizes the imputed cost of pension and other retirement benefits during the employees‟ 

active years of service. OPM actuaries determine pension cost factors by calculating the value of 

pension benefits expected to be paid in the future, and communicate these factors to FMC for 

current period expense reporting. OPM also provides information regarding the full cost of 

health and life insurance benefits. FMC recognizes 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, are the responsibility of the OPM, as the administrator.

L. Other Post-Employment Benefits

FMC employees eligible to participate in the Federal Employees' Health Benefits Plan (FEHBP) 

and the Federal Employees' Group Life Insurance Program (FEGLIP) may continue to participate

in these programs after their retirement. The OPM has provided the FMC with certain cost factors

that estimate the true cost of providing the post-retirement 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

The preparation of the accompanying financial statements in accordance with Generally Accepted 

Accounting Principles requires management to make certain estimates and assumptions that affect

the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ

from those estimates.

N. Imputed Costs/Financing Sources

Federal government entities often receive goods and services from other Federal government 

entities without reimbursing the providing entity for all the related costs. In addition, Federal 

government entities also incur costs that are paid in total or in part by other entities. An imputed 

financing source is recognized by the receiving entity for costs that are paid by other entities. 

FMC recognized imputed costs and financing sources in fiscal years 2013 and 2012 to the extent 

directed by accounting standards.
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont’d

47

O. Contingencies

Liabilities are deemed contingent when the existence or amount of the liability cannot be 

determined with certainty, pending the outcome of future events. FMC recognizes contingent 

liabilities in the accompanying balance sheet and statement of net cost, when it is both probable 

and can be reasonably estimated. FMC discloses contingent liabilities in the notes to the financial 

statements when the conditions for liability recognition are not met, or when a loss from the 

outcome of future events is more than remote. In some cases, once losses are certain, payments 

may be made from the Judgment Fund maintained by 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.

P. Reclassifications

Certain fiscal year 2012 balances have been reclassified, re-titled, or combined with other financial

statement line items for consistency with the current year presentation.

NOTE 2- FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2013 and 2012 are as 

follows:

Fund Balances:

2013 2012

Appropriated Funds $ 2,620,747 $ 4,254,644

Total $ 2,620,747 $ 4,254,644

Status of Fund Balance with Treasury:

Unobligated Balance

Available $ 10,251 $ 86,652

Unavailable 575,060 1,198,398

Obligated Balance Not Yet Disbursed 2,035,436 2,969,594

Total $ 2,620,747 $ 4,254,644

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.
48

NOTE 2- FUND BALANCE WITH TREASURY Cont’d

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, 2013 and 2012, are as follows:

2013 2012

With the Public Accounts Receivable $ 273 $ 4,031

Total Accounts Receivable $ 273 $ 4,031

The accounts receivable is primarily made up of bills to public for goods and services. Historical 

experience has indicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2013 and 2012.

NOTE 4- PROPERTY, EQUIPMENT, AND SOFTWARE

The Schedule of Property, Equipment, and Software as of September 30, 2013 is as follows:

Major Class

Acquisition

Cost

Accumulated 

Amortization/ 

Depreciation

Net Book

Value

Leasehold Improvements $ 225,000 $ 202,500 $ 22,500

Furniture & Equipment 315,251 202,704 112,547

Software-in-Development 210,579 - 210,579

Total $ 750,830 $ 405,204 $ 345,626

Schedule of Property, Equipment, and Software as of September 30, 2012 is as follows:

Major Class

Acquisition

Cost

Accumulated 

Amortization/ 

Depreciation

Net Book

Value

Leasehold Improvements $ 225,000 $ 157,500 $ 67,500

Furniture & Equipment 315,250 143,006 172,244

Software-in-Development 180,579 - 180,579

Total $ 720,829 $ 300,506 $ 420,323

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2013 and 2012 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.
49

NOTE 5- LIABILITIES NOT COVERED BY BUDGETARY RESOURCES Cont’d

2013 2012

Intragovernmental – FECA $ 200 $ 324

Unfunded Leave 1,249,227 1,276,758

Actuarial FECA 6,912 5,910 

Total Liabilities Not Covered by Budgetary Resources $ 1,256,339 $ 1,282,992

Total Liabilities Covered by Budgetary Resources 800,780 1,495,862 

Total Liabilities $ 2,057,119 $ 2,778,854

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual 

workers compensation claims and unemployment benefits paid on FMC‟s behalf and payable to 

the DOL. FMC also records an actuarial liability for future workers compensation claims based 

on the liability to benefits paid (LBP) ratio provided by DOL and multiplied by the average of 

benefits paid over three years.

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The 

balance in the accrued annual leave account is reviewed quarterly and adjusted as needed to 

accurately reflect the liability at current pay rates and leave balances. Accrued annual leave is 

paid from future funding sources and, accordingly, is reflected as a liability not covered by 

budgetary resources. Sick and other leave is expensed as taken.

NOTE 6- 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 2013 and 2012 were $2,985,156 and $2,965,085, respectively. The lease

locations and terms are listed below:

Location Term Lease Expiration Date

Washington, DC 10 years 10/31/2022

Jamaica, NY 5 years *07/01/2013

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

*Lease is currently month-to-month until new space in Iselin, NJ is completed.
50

NOTE 6- OPERATING LEASES Cont’d

The operating lease amount does not include estimated payments for leases with annual renewal 

options. The schedule of future minimum payments for the term of the leases is as follows:

FiscalYear

2014

Totals

$ 3,141,257

2015 3,156,813

2016 3,187,748

2017 3,219,611

2018 3,445,105

Thereafter 10,544,535

Total Future Minimum Payments $ 26,695,069

NOTE 7- CONTINGENT LIABILITIES

FMC records commitments and contingent liabilities for legal cases in which payment has been 

deemed probable and for which the amount of potential liability has been estimated, including 

certain judgments that have been issued against the agency. There was one legal action pending 

against FMC, with an estimated possible liability of $300,000 in FY 2012. The FMC has no 

knowledge of lawsuits/investigations arising from FMC operations in FY 2013.

NOTE 8- INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other 

Federal government entities, and are in contrast to those with non-Federal entities (the public). 

Such costs and revenue are summarized as follows:

2013 2012

Operational and Administrative

Intragovernmental Costs $ 4,592,510 $ 4,811,649

Public Costs 11,510,422 12,096,505 

Total Program Costs 16,102,932 16,908,154

Less: Intragovernmental Earned Revenue - (41,676) 

Net Program Costs 16,102,932 16,866,478

Formal Proceedings

Intragovernmental Costs 1,304,358 1,529,477

Public Costs 6,299,288 5,844,906 

Total Program Costs 7,603,646 7,374,383 

Net Program Costs 7,603,646 7,374,383 

Office of Inspector General

Intragovernmental Costs 115,130 129,247

Public Costs 519,600 614,311

Total Program 634,730 743,558

Less: Intragovernmental Earned Revenue (20,410) (12,984) 

Net Program Costs 614,320 730,574 
51

NOTE 8- INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE Cont’d

Office of Equal Employment Opportunity

2013 2012

Intragovernmental Costs $ 19,624 $ 28,548

Public Costs 175,688 165,063 

Total Program Costs 195,312 193,612 

Net Program Costs 195,312 193,612 

Net Cost of Operations $ 24,516,210 $ 25,165,046

Total Intragovernmental costs 6,031,622 6,498,922

Total Public Costs 18,504,998 18,720,784 

Total Costs 24,536,620 25,219,706

Less: Total Intragovernmental Earned Revenue (20,410) (54,660) 

Net Cost of Operations $ 24,516,210 $ 25,165,046

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 fiscal years ended September 30, 2013 and 2012, imputed financing was as 

follows:

Office of Personnel Management

2013 2012

$ 1,418,039 $1,458,582 

TotalImputedFinancing Sources $ 1,418,039 $1,458,582

NOTE 10- BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President‟s budget that will include fiscal year 2013 actual budgetary execution information 

has not yet been published. The President‟s budget is scheduled for publication in February

2014, and will be found at the OMB Website: http://www.whitehouse.gov/omb/. The 2013

Budget of the United States Government, with the "Actual" column completed for 2012, has 

been reconciled to the Statement of Budgetary Resources and there were no material differences.

NOTE 11- APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2013 and 2012 

consisted of the following:

2013 2012

Direct Obligations, Category A $ 22,987,460 $24,084,024

Reimbursable Obligations, Category A 20,410 54,660 

Total Obligations Incurred $ 23,007,870 $24,138,684

Category A apportionments distribute budgetary resources by fiscal quarters.
52

Imputed Financing from Costs Absorbed by Others 1,418,039 1,458,582 

Net Other Resources Used to Finance Activities 1,418,039 1,458,582 

 Total Resources Used to Finance Activities 21,357,184 26,025,490

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

Operations 3,002,168 (1,009,016) 

 Total Resources Used to Finance the Net Cost of Operations 24,359,352 25,016,474 

Total Components of Net Cost of Operations that will not Require or

Generate Resources in the Current Period 156,858 148,572 

 Net Cost of Operations $ 24,516,210 $ 25,165,046

NOTE 12- UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the fiscal years ended September 30, 2013 and 2012, budgetary resources obligated for 

undelivered orders amounted to $1,234,929 and $1,473,988, respectively.

NOTE 13- CUSTODIAL ACTIVITY

FMC is an administrative agency collecting funds for another entity or the General Fund. As a 

collecting entity, FMC measures and reports cash collections and refunds. These collections are 

reported as custodial ctivity on the “Statement of Custodial Activity”. The type of cash collected

is for fines, penalties and administrative fees. A small portion is for interest on the past due fines.

Another part of the custodial activity is application for licenses issued to qualified Ocean

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

changes, and special permission fees.

Custodial receipts are broken out in the following general receipt funds:

2013 2012

Fines, Penalties, and Forfeitures $ 3,102,173 $ 665,000

General Fund Proprietary Receipts (user fees) 219,812 341,673

Refund of User Fees (2,419) (375) 

Total Custodial Collections $ 3,319,566 $ 1,006,298

NOTE 14- RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

FMC has reconciled its budgetary obligations and non-budgetary resources available to its net 

cost of operations.

Resources Used to Finance Activities

Budgetary Resources Obligated

2013 2012

Obligations Incurred

Spending Authority from Offsetting Collections and Recoveries

$ 23,007,870

(3,068,725) 

$ 24,138,684

428,224 

Obligations Net of Offsetting Collections and Recoveries 19,939,145 24,566,908 

Other Resources
53

NOTE 15- SUBSEQUENT EVENTS

In preparing these financial statements, management has evaluated events and transactions for 

potential recognition or disclosure through December 2, 2013, which is the date the financial 

statements are available to be issued.
54

APPENDIX A -

FEDERAL MARITIME COMMISSION COMMENTS ON 

DRAFT AUDIT REPORT
55

December 12, 2013

Regis & Associates, PC

1400 Eye Street, NW, Suite 425 

Washington, DC 20005

Dear Mr. Regis:

I have reviewed the financial statements audit report provided to me for the fiscal year ended 

September 30, 2013. I am pleased to note that there were no weaknesses or reportable findings, 

and that this audit is the tenth consecutive unqualified opinion that the Federal Maritime 

Commission has received.

Sincerely,

/Vern W. Hill

Chief Financial Officer

 

Federal Maritime 

Commission

800 North Capitol Street, N.W. 

Washington, D.C. 20573-0001 

 

 

Office of the 

Managing Director

 

Phone: (202) 523-5800 

Fax: (202) 523-3646 

E-mail: omd@fmc.gov
56

FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

A. Reporting Entity

The Federal Maritime Commission (FMC) 

was established as an independent regulatory 

agency on August 12, 1961. The FMC is 

responsible for the regulation of ocean borne 

transportation in the foreign commerce of the 

United States (U.S.). The principal statutes or 

statutory provisions administered by the FMC 

are the Shipping Act of 1984, as amended by 

the Ocean Shipping Reform Act (OSRA) 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 FMC monitors the activities of ocean 

common carriers, marine terminal operators 

(MTOs), agreements among ocean common 

carriers and/or MTOs, ports and ocean 

transportation intermediaries (OTI) (nonvessel-operating common carriers and ocean 

freight forwarders) operating in the U.S. 

foreign commerce to ensure they maintain just 

and reasonable practices; maintains trade 

monitoring, enforcement and dispute 

resolution programs designed to assist 

regulated entities in achieving compliance and 

to detect and remedy malpractices and 

violations of the 1984 Act; monitors the laws 

and practices of foreign governments which 

could have a discriminatory or otherwise 

adverse impact on shipping conditions in U.S. 

trades, and imposes remedial action, as 

appropriate, pursuant to section 19 of the 1920 

Act or FSPA; enforces special regulatory 

requirements applicable to carriers owned or 

controlled by foreign governments; processes 

and reviews agreements, service contracts, and 

service arrangements pursuant to the 1984 Act 

for compliance with statutory requirements; 

and reviews common carriers‟ privately 

published tariff systems for accessibility and 

accuracy, as required by OSRA. 

The FMC also issues licenses to qualified 

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 
57

congressional appropriations or other 

authorizations to spend general revenues. 

General Fund Miscellaneous Receipts are 

accounts established for receipts of nonrecurring activity, such as fines, penalties, fees 

and other miscellaneous receipts for services 

and benefits.

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.

B. Basis of Presentation

The financial statements have been prepared to 

report the financial position and results of 

operations of FMC. The Balance Sheet 

presents the financial position of the agency. 

The Statement of Net Cost presents the 

agency‟s operating results; the Statement of 

Changes in Net Position displays the changes 

in the agency‟s equity accounts. The Statement 

of Budgetary Resources presents the sources, 

status, and uses of the agency‟s resources and 

follows the rules for the Budget of the United 

States Government.

The statements are a requirement of the Chief 

Financial Officers Act of 1990, the 

Government Management Reform Act of 1994 

and the Accountability of Tax Dollars Act of 

2002. 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. 

FMC does not maintain bank accounts of its 

own, has no disbursing authority and does not 

maintain cash held outside of Treasury. 

Treasury disburses funds for FMC on demand. 

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 
58

technology hardware and software which are 

recorded at original acquisition cost and are 

de-preciated or amortized using the straightline 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, equip-ment, 

and software acquisitions that do not meet the 

capitalization criteria are expensed upon 

receipt. Applicable standard governmental 

guide-lines regulate the disposal and 

convertibility of agency property, equipment, 

and software. The useful life classifications 

for capitalized assets are as follows:

Description Useful Life (years)

Leasehold Improvements 5

Office Furniture 5

Computer Equipment 5

Office Equipment 5

Software 5

G. Advances and Prepaid Charges

Advance payments are generally prohibited by 

law. There are some exceptions, such as 

reimbursable agreements, subscriptions and 

payments to contractors and employees. 

Payments made in advance of the receipt of 

goods and services are recorded as advances or 

prepaid charges at the time of prepayment and 

recognized as expenses when the related goods 

and services are received.

H. Liabilities

Liabilities represent the amount of funds likely 

to be paid by the FMC as a result of 

transactions or events that have already 

occurred.

The FMC reports its liabilities under two 

categories, Intragovernmental and With the 

Public. Intragovernmental liabilities represent 

funds owed to another government agency. 

Liabilities with the Public represent funds 

owed to any entity or person that is not a 

Federal agency, including private sector firms 

and Federal employees. Each of these 

categories may include liabilities that are 

covered by budgetary resources and liabilities 

not covered by budgetary resources.

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist 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. 
59

Nonvested 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 effective at 50% 

beginning FY 2010 and 100% in 2014.

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 onthe-job injuries. The DOL bills each agency 

annually as its claims are paid, but payment of 

these bills is deferred for two years to allow 

for funding through the budget process. 

Similarly, employees that the FMC terminates 

without cause may receive unemployment 

compensation benefits under the 

unemployment insurance program also 

administered by the DOL, which bills each 

agency quarterly for paid claims. Future 

appropriations will be used for the 

reimbursement to DOL. The liability consists 

of (1) the net present value of estimated future 

payments calculated by the DOL, and (2) the 

unreimbursed cost paid by DOL for 

compensation to recipients under the FECA.

K. Retirement Plans

FMC employees participate in either the CSRS 

or the FERS. The employees who 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% of pay. For FERS 

participants, FMC also contributes the 

employer‟s matching share of Social Security.

FERS employees and certain CSRS 

reinstatement employees are eligible to 

participate in the Social Security program after 

retirement. In these instances, FMC remits the 

employer‟s share of the required contribution.

FMC recognizes the imputed cost of pension 

and other retirement benefits during the 

employees‟ active years of service. OPM 

actuaries determine pension cost factors by 

calculating the value of pension benefits 

expected to be paid in the future and 

communicate these factors to FMC for current 

period expense reporting. OPM also provides 

information regarding the full cost of health 

and life insurance benefits. FMC recognizes 

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, are the 

responsibility of the OPM, as the administrator.

L. Other Post-Employment Benefits

FMC employees eligible to participate in the 

Federal Employees' Health Benefits Plan 

(FEHBP) and the Federal Employees' Group 

Life Insurance Program (FEGLIP) may 

continue to participate in these programs after 

their retirement. The OPM has provided the 

FMC with certain cost factors that estimate the 

true cost of providing the post-retirement 

benefit to current employees. The FMC 
60

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

The preparation of the accompanying financial 

statements in accordance with generally 

accepted accounting principles requires 

management to make certain estimates and 

assumptions that affect the reported amounts 

of assets, liabilities, revenues, and expenses. 

Actual results could differ from those 

estimates. 

N. Imputed Costs/Financing Sources

Federal government entities often receive 

goods and services from other Federal 

government entities without reimbursing the 

providing entity for all the related costs. In 

addition, Federal government entities also 

incur costs that are paid in total or in part by 

other entities. An imputed financing source is 

recognized by the receiving entity for costs 

that are paid by other entities. FMC 

recognized imputed costs and financing 

sources in fiscal years 2013 and 2012 to the 

extent directed by accounting standards.

O. Contingencies

Liabilities are deemed contingent when the 

existence or amount of the liability cannot be 

determined with certainty pending the 

outcome of future events. FMC recognizes 

contingent liabilities in the accompanying 

balance sheet and statement of net cost, when 

it is both probable and can be reasonably 

estimated. FMC discloses contingent 

liabilities in the notes to the financial 

statements when the conditions for liability 

recognition are not met or when a loss from 

the outcome of future events is more than 

remote. In some cases, once losses are certain, 

payments may be made from the Judgement 

Fund maintained by the U.S. Treasury rather 

than from the amounts appropriated to FMC 

for agency operations. Payments from the 

Judgement Fund are recorded as an “Other 

Financing Source” when made.

P. Reclassification

Certain fiscal year 2012 balances have been 

reclassified, retitled, or combined with other 

financial statement line items for consistency 

with the current year presentation.
61

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2013 and 2012 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).

2013 2012

Fund Balances:

Appropriated Funds 2,620,747 4,254,644 

Total $ 2,620,747 $ 4,254,644 

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 10,251 $ 86,652 

 Unavailable 575,060 1,198,398 

Obligated Balance Not Yet Disbursed 2,035,436 2,969,594 

Total $ 2,620,747 $ 4,254,644 
62

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2013 and 2012, were as follows:

The accounts receivable is primarily made up of bills to public for goods and services. Historical 

experience has indicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2013 and 2012.

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2013

Schedule of Property, Equipment, and Software as of September 30, 2012

2013 2012

With the Public

Accounts Receivable $ 273 $ 4,031

Total Accounts Receivable $ 273 $ 4,031

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements 225,000 202,500 22,500

Furniture & Equipment $ 315,251 $ 202,704 $ 112,547

Software-in-Development 210,579 - 210,579

Total $ 750,830 $ 405,204 $ 345,626

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements 225,000 157,500 67,500

Furniture & Equipment $ 315,250 $ 143,006 $ 172,244

Software-in-Development 180,579 - 180,579

Total $ 720,829 $ 300,506 $ 420,323
63

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2013 and 2012 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‟s behalf and payable to 

the DOL. FMC also records an actuarial liability for future workers compensation claims based 

on the liability to benefits paid (LBP) ratio provided by DOL and multiplied by the average of 

benefits paid over three years. 

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The 

balance in the accrued annual leave account is reviewed quarterly and adjusted as needed to 

accurately reflect the liability at current pay rates and leave balances. Accrued annual leave is 

paid from future funding sources and, accordingly, is reflected as a liability not covered by 

budgetary resources. Sick and other leave is expensed as taken. 

2013 2012

Intragovernmental – FECA $ 200 $ 324

Unfunded Leave 1,249,227 1,276,758

Actuarial FECA 6,912 5,910

Total Liabilities Not Covered by Budgetary Resources $ 1,256,339 $ 1,282,992

Total Liabilities Covered by Budgetary Resources 800,780 1,495,862

Total Liabilities $ 2,057,119 $ 2,778,854
64

NOTE 6. 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 2013 and 2012 were $2,985,156 and $2,965,085, 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 7. CONTINGENT LIABILITIES

FMC records commitments and contingent liabilities for legal cases in which payment has been 

deemed probable and for which the amount of potential liability has been estimated, including 

certain judgments that have been issued against the agency. There was one legal action pending 

against FMC, with an estimated possible liability of $300,000 in FY 2012. The FMC has no 

knowledge of lawsuits/investigations arising from FMC operations in FY 2013.

Location Term Lease Expiration Date

Jamaica, NY 5 years *07/01/2013

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

Washington, DC 10 years 10/31/2022

*Lease is currently month-to-month until new space in Iselin, NJ is completed.

Fiscal Year Totals

2014 3,141,257 

2015 3,156,813 

2016 3,187,748 

2017 3,219,611 

2018 3,445,105 

Thereafter 10,544,535 

Total Future Payments $ 26,695,069 
65

NOTE 8. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other Federal 

government entities, and are in contrast to those with non-Federal entities (the public). Such costs and 

revenue are summarized as follows:

2013 2012

Operational and Administrative

 Intragovernmental Costs $ 4,592,510 $ 4,811,649

 Public Costs 11,510,422 12,096,505

 Total Program Costs 16,102,932 16,908,154

 Less: Intragovernmental Earned Revenue - (41,676)

 Net Program Costs 16,102,932 16,866,478

Formal Proceedings

 Intragovernmental Costs 1,304,358 1,529,477

 Public Costs 6,299,288 5,844,906

 Total Program Costs 7,603,646 7,374,383

 Net Program Costs 7,603,646 7,374,383

Office of Inspector General

 Intragovernmental Costs 115,130 129,247

 Public Costs 519,600 614,311

 Total Program Costs 634,730 743,558

 Less: Intragovernmental Earned Revenue (20,410) (12,984)

 Net Program Costs 614,320 730,574

Office of Equal Employment Opportunity

 Intragovernmental Costs 19,624 28,549

 Public Costs 175,688 165,063

 Total Program Costs 195,312 193,612

 Net Program Costs 195,312 193,612

Total Intragovernmental costs 6,031,622 6,498,922

Total Public Costs 18,504,998 18,720,784

 Total Costs 24,536,620 25,219,706

Less: Total Intragovernmental Earned Revenue (20,410) (54,660)

 Total Net Cost $ 24,516,210 $ 25,165,046
66

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 fiscal 

years ended September 30, 2013 and 2012 imputed financing was as follows:

NOTE 10. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President‟s Budget that will include fiscal year 2013 actual budgetary execution information 

has not yet been published. The President‟s Budget is scheduled for publication in February 

2014 and will be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2013

Budget of the United States Government, with the "Actual" column completed for 2012, has 

been reconciled to the Statement of Budgetary Resources and there were no material differences. 

NOTE 11. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2013 and 2012

consisted of the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the fiscal years ended September 30, 2013 and 2012, budgetary resources obligated for 

undelivered orders amounted to $1,234,929 and $1,473,988, respectively.

2013 2012

Office of Personnel Management $ 1,418,039 $ 1,458,582 

Total Imputed Financing Sources $ 1,418,039 $ 1,458,582 

2013 2012

Direct Obligations, Category A $ 22,987,460 $ 24,084,024

Reimbursable Obligations, Category A 20,410 54,660

Total Obligations Incurred $ 23,007,870 $ 24,138,684
67

NOTE 13. CUSTODIAL ACTIVITY

FMC is an administrative agency collecting for another entity or the General Fund. As a 

collecting entity, FMC measures and reports cash collections and refunds. These collections are 

reported as custodial activity on the “Statement of Custodial Activity.” The type of cash 

collected is for fines, penalties and administrative fees. A small portion is for interest on the past 

due fines. Another part of the custodial activity is application for licenses issued to qualified 

Ocean Transportation Intermediaries (OTIs) in the U.S., Commission reviews, petitions, status 

changes and special permission fees.

Custodial receipts are broken out in the following general receipt funds:

NOTE 14. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

FMC has reconciled its budgetary obligations and non-budgetary resources available to its net cost of 

operations.

2013 2012

Fines, Penalties, and Forfeitures $ 3,102,173 $ 665,000 

General Fund Proprietary Receipts (user fees) 219,812 341,673 

Refund of User Fees (2,419) (375)

Total Custodial Collections $ 3,319,566 $ 1,006,298 

2013 2012

 Obligations Incurred $23,007,870 $24,138,684

 Spending Authority from Offsetting Collections and Recoveries (3,068,725) 428,224

 Obligations Net of Offsetting Collections and Recoveries 19,939,145 24,566,908

 Imputed Financing from Costs Absorbed by Others 1,418,039 1,458,582

 Net Other Resources Used to Finance Activities 1,418,039 1,458,582

 21,357,184 26,025,490

 3,002,168 (1,009,016)

 24,359,352 25,016,474

Generate Resources in the Current Period 156,858 148,572

Net Cost of Operations $24,516,210 $25,165,046

Total Components of Net Cost of Operations That will not Require or 

Total Resources Used to Finance the Net Cost of Operations 

Resources Used to Finance Activities

Budgetary Resources Obligated

Other Resources

Total Resources Used to Finance Activities 

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

Operations 
Chapter Four

OTHER INFORMATION
Chapter Four Other Information

69

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 15, 2013

Office of Inspector General

TO: Chairman Cordero

Commissioner Lidinsky 

Commissioner Doyle 

Commissioner Dye 

Commissioner Khouri 

FROM: Interim Inspector General 

SUBJECT: Inspector General‟s Statement on the Federal Maritime Commission‟s Management and 

Performance Challenges 

On November 22, 2000, the President signed the Reports Consolidation Act of 2000 (Public Law 106-

531), an amendment to the Chief Financial Officers (CFO) Act of 1990. The Reports Consolidation Act 

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 on Commission 

challenges to be included in the Federal Maritime Commission‟s (FMC) Performance and Accountability 

Report (PAR) for Fiscal Year 2013. 

This year, the Office of Inspector General (OIG) has identified three management and performance 

challenges for inclusion in the FMC‟s FY 2013 PAR: information technology security; workplace 

satisfaction; and budgetary resources. These assessments are based on information derived from a 

combination of sources, including OIG audit and inspection work, Commission reports, and a general 

knowledge of the Commission‟s programs. 

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 PAR that is due on 

December 16, 2013 [revised due date as a result of the government shutdown]. 

/Jon Hatfield

Interim Inspector General

Attachment

cc: Vern Hill, Managing Director
Chapter Four Other Information

70

Office of Inspector General - Fiscal Year 2013 Management 

Challenges

The Management Challenge: Information Technology Security

The Federal Maritime Commission (FMC) maintains significant amounts of information about 

its employees and stakeholders and has a responsibility to protect the information from loss, 

unauthorized disclosure or misuse. Properly protecting this information is critical to prevent 

harm, embarrassment, and negative impact to the agency, its employees and stakeholders. The 

challenge the FMC faces in information technology (IT) security and protecting information is 

shared by other departments and agencies in the federal government. In addition, among the 

challenges the FMC and other federal agencies face is protecting personally identifiable 

information (PII) of its employees and stakeholders. Personally identifiable information (PII) is 

any information about an individual that is maintained by an agency, including information that 

can be used to distinguish or trace an individual‟s identity, such as name, social security number, 

date and place of birth, mother‟s maiden name, or biometric records; and any other information 

that is linked or linkable to an individual, such as medical, educational, financial and 

employment information. Failure to protect PII can lead to identity theft, a serious and 

increasing problem in the United States.

In recent years, some federal agencies have reported the loss or theft of equipment containing 

personal information or unauthorized access to information on agency systems. The Privacy Act 

of 1974 and the E-Government Act of 2002 establish federal agency responsibilities to protect 

personal information, and to ensure its security. Given the importance of protecting 

stakeholders‟ and employees‟ PII, the FMC emphasizes information security through annual 

security awareness training and establishment of policy documents, such as commission orders, 

managing directives and Office of Information Technology (OIT) policies. 

In the OIG‟s Evaluation of the FMC’s Compliance with the Federal Information Security 

Management (FISMA) Act FY 2012, we found the servers and workstations were not configured 

with the latest security patches and there were computer agents, a type of computer program, 

with outdated services running that could be exploited. In addition, the OIG‟s Evaluation of the 

FMC’s FY 2012 Privacy and Data Protection found that improved communication amongst the 

management officials responsible for information privacy was needed. Specifically, the OIG 

concluded coordination was lacking between the Office of Information Technology, the Chief 

Information Officer, Privacy Act Officer and the Senior Agency Official for Privacy to 

determine whether any PII resided on FMC systems.

Agency Progress in Addressing the Challenge:

The OIG‟s Evaluation of the FMC’s FY 2012 Privacy and Data Protection completed in 

December 2012 concluded the agency has improved its privacy program since our last review in 

2010. For example, the agency resolved two of four deficiencies and has created policies and 

procedures to log, verify and reassess data extracts from databases holding sensitive information 

for longer than 90 days. In addition, the OIG‟s FY 2012 FISMA evaluation found that FMC had 

made some progress addressing IT security weaknesses. The OIG is currently conducting the 
Chapter Four Other Information

71

FY 2013 FISMA evaluation and continued progress is being made by FMC to address security 

weaknesses; the final report is expected to be issued in late 2013. 

Challenge Ahead:

Increasingly, computer systems are more susceptible to security threats, primarily due to the 

interconnection of computer networks, and as individuals‟ computer skills increase and 

“hacking” techniques are more widely known via the Internet and other media. The challenge 

the FMC faces is to continue to protect its computer systems and information, during a budget 

environment that requires the agency to do more, with less resources. It will therefore be critical 

for the agency to prioritize security controls and enhancements based on risk, as well as partner 

with federal agencies to protect vital agency resources.

The Management Challenge: Workplace Satisfaction

In December 2012, the Partnership for Public Service (“PPS”) released its rankings for the Best 

Places to Work in the Federal Government, based on the results of the 2012 Federal Employee 

Viewpoint Survey. The FMC ranked the second lowest, 28 out of the 29 small federal 

government agencies. Although the FMC has experienced a steady decline since 2009, 

according to the Washington Post, for the last two years, the agency experienced the largest drop 

in rankings among Cabinet departments and independent agencies. 

The PPS uses data from the Office of Personnel Management‟s Federal Employee Viewpoint 

Survey to rank agencies according to a Best Places to Work index score. Agency employees are 

surveyed and then the agencies are measured on overall employee satisfaction, as well as 10 

workplace categories, such as effective leadership, employee skills/mission match, pay, 

teamwork and work/life balance.

In response to its low ranking, the agency‟s then Managing Director issued an email to all 

agency employees outlining the agency‟s plan to improve the climate and satisfaction at the 

agency. Further, since the survey was conducted in 2012, there have been several changes at the 

FMC; among these are changes in senior leadership, including a newly designated Chairman in 

April 2013 and a new Managing Director. 

Agency Progress in Addressing the Challenge:

In January 2013, the PPS provided a briefing to senior agency officials and made 

recommendations on how to proceed, based on best practices from other federal government 

agencies. Subsequently, the agency‟s senior executives produced a draft action plan (“Draft”), 

which included the production of a Statement of Principles (“Statement”), signed and released on 

May 22, 2013. The Statement asserts the senior executives‟ commitment “to work together to 

create a positive working environment at the Commission that is achieved through 

communication, recognition, empowerment and accountability.” The Statement also provides 

for the incorporation of the stated principles into the senior executives‟ performance plans.
Chapter Four Other Information

72

The Draft includes four categories, commitment, communication, recognition, and 

empowerment, which are each detailed with additional areas of focus. These include statements 

such as: promote and provide opportunities for wide participation in the FMC‟s strategic 

planning process; keep staff advised on significant matters via periodic All Hands Meetings; 

periodic brown bag lunches where staff can discuss and raise issues of interest or concern; and 

promote transparency.

The Challenge Ahead:

Ten months after the survey rankings were posted; two All Hands Meetings have been 

conducted, and a Statement of Principles has been drafted that includes commitments for change. 

Continued focus at all levels of the agency has significant potential to yield positive results. The 

Draft Statement of Principles should include additional details on measurable objectives, 

accountability, and continued discussions and feedback with staff at all levels should be held 

regularly to increase the likelihood of success. The Draft calls for follow up meetings among the 

senior executives to assess their progress, therefore incorporating measurable objectives will be 

critical to accurately determine the success of their efforts.

It is commendable that the agency has responded to the negative survey results and has worked 

to effect change in the agency‟s environment. In a federal climate where funding is limited, 

admittedly, it will take creative thinking to find ways to recognize, reward good performance and 

improve employee morale. Since recognition was one of the low ratings in the survey, 

something as simple as a certificate of achievement or recognizing a job well done in a public 

forum, such as an all-hands meeting, could prove successful. Whatever the medium or forum, 

improving workplace satisfaction can be accomplished when staff and management work 

together towards common goals. 

The Management Challenge: Budgetary Resources

In August 2011, Congress enacted the Budget Control Act of 2011 (“Budget Legislation”). 

Among other things, the Budget Legislation provided for ten (10)-year discretionary caps with 

sequester, if the Administration and Congress could not reach an agreement on spending by an 

established deadline. The cuts were perceived to be so disastrous that, surely, a compromise 

would be reached. Time passed and the parties reached, not a compromise to prevent the 

automatic spending reduction process but, an impasse. Finally, it was determined that the cuts, 

i.e., sequestration, would take effect, initially to begin in January 2013.

Agency Progress in Addressing the Challenge:

Approximately 65% of the FMC‟s budget is for personnel compensation and benefits; and 

another 13% is to pay office rent, a fixed cost. Therefore, a sizable portion of the FMC‟s annual 

budget is spent on salaries and benefits, and rent, and this leaves few options to minimize the 

impact of the current fiscal challenges. Because the agency spends a sizable portion on payroll, 

FMC senior leaders will increasingly need to heavily scrutinize each and every staff vacancy and 

whether the mission of the agency can continue to be effectively accomplished without filling 

some vacancies. 
Chapter Four Other Information

73

In recent years, the FMC has generally filled the majority of staff vacancies and it will be 

difficult to continue this trend unless additional budgetary resources are provided to the agency 

or changes are made to the sequestration. In FY 2010, for example, before the specter of the 

sequestration, the agency hired nineteen (19) new employees, while only fifteen (15) separated 

from the agency. By comparison, in FY 2011, there were seven (7) new hires and nine (9) 

separations. In FY 2012, thirteen (13) new hires and fifteen (15) separations were processed. 

And finally, in the last full year, FY 2013, eleven (11) employees separated from the agency and 

the agency hired seven (7) new employees, including one new hire whose tenure began the very 

week the sequestration took effect.

In March 2013, the agency issued furlough notices to its employees proposing 112 hours, or 14 

days, of furloughs. In April 2013, the agency advised its employees that it was trying to limit the 

number of furlough hours to the fewest possible. It also advised that funds would be directed to 

updating the agency‟s information technology. In July, the agency informed the employees that 

the furlough days would be reduced to six (6) days, rather than the initial forecast of 14 days.

The Challenge Ahead:

The agency is to be congratulated on its ability to reduce its initial forecasted employee furlough 

days. As the FMC begins a new fiscal year, with a budget likely to be under continued pressure, 

it will be critical for the FMC to constantly evaluate and re-evaluate the necessity for each 

contemplated expenditure, including the on-going expenses that may be associated with the 

initial outlay. Unless new legislation is passed to end the sequestration, the Budget Legislation 

provides for an ever decreasing budget until 2021. Therefore, the agency must continue to be 

focused on the budget in order to effectively accomplish the mission of the agency and attempt to 

minimize the negative impacts of the sequestration. 
Chapter Four Other Information

74

Comments on IG-Identified Management and Performance 

Challenges

The Inspector General identifies three management and performance challenges facing the FMC, 

as outlined below:

I Information Technology Security

Management agrees that protecting computer systems and information is critical, and 

increasingly difficult in an ever-changing technology environment. Staff continues to make 

progress on addressing the agency‟s known IT security vulnerabilities, however, it will be an 

increasingly difficult task with a smaller portion of the agency‟s budget available to purchase 

needed software and equipment in the coming fiscal years. Staff is working to develop an IT 

plan for the next several years, weighing risk and prioritizing needs to protect our vital resources. 

II Workplace Satisfaction

The FMC‟s Chairman and the senior executive service staff (SES) continue to work 

closely on efforts to improve workplace satisfaction. The Statement of Principles was issued by 

the SES and endorsed by Chairman Cordero on May 22, 2013. Since then, all SES that report 

directly to the Chairman have updated their SES contracts to incorporate the principles into their 

performance plans. The other SES who do not report directly to the Chairman will incorporate 

the principles into their FY 2014 contracts. In July 2013, a Draft Plan of Action to Improve 

FMC Working Environment & Employee Morale was provided to staff. During August and 

September, the SES met with staff to discuss the draft plan and gather comments and feedback. 

Staff comments are now being discussed by the SES and Chairman in frequent, regular meetings, 

so that the Chairman and SES can have a more finely focused approach to address workplace 

satisfaction issues. 

III Budgetary Resources

Management agrees that increasingly difficult budget choices must be made under the 

current fiscal climate. All agency programs are competing for scarce resources. Our goal is 

always to carefully prioritize and manage spending throughout the fiscal year so that all funds 

are put to the best use. Typically, payroll costs (salaries and benefits) represent about 75% of the 

Commission‟s annual expenses. Approximately 20% more of the budget is required for rent and 

other non-discretionary costs, leaving virtually no discretionary funds. It required great fiscal 

restraint and sacrifices by agency staff to meet the post sequestration/rescission appropriation 

level during 2013. Important vacancies remained unfilled, discretionary travel was eliminated, 

and contracts were cancelled and/or significantly reduced, including IT contract funding, to 

reduce the forecasted furlough days from up to 14 to just 6. Chairman Cordero‟s office held 

weekly budget status meetings to discuss and identify potential cost reductions and economies.
Chapter Four Other Information

75

Close scrutiny of staff vacancies will continue for the foreseeable future. As noted, 

during fiscal years 2010 through 2013, the FMC hired 46 employees and 50 employees left the 

agency, a net loss of 4 positions. The FMC was unable to meet authorized FTE levels during 

each of these fiscal years due to appropriation levels and other competing funding needs.

Great consideration was given to the staff position that was filled in March 2013.

Recruitment for this position was approved in August 2012 to replace an unanticipated disability 

retirement of an employee who had been on extended sick leave for much of 2010 through mid2012. The vacancy was staffed at an entry-level grade and funding for the position was included 

in the agency‟s OMB-approved Sequestration Plan. Ever increasing reporting demands have 

been placed upon the Budget Office staff. Filling the vacancy was deemed critical so that 

management could continue to be provided with detailed budget analyses and to provide 

resources to meet external reporting requirements. Further, filling the vacancy was vital to the 

office‟s succession planning, as all other office staff are eligible for immediate voluntary 

retirement. In summary, the backfill position that was staffed during the pay period that 

sequestration became effective was a fiscally responsible action.

We will continue to closely monitor expenditures in order to reallocate funds where 

needed throughout the year. Weekly budget status meetings to review expenses at the sub-object 

code level have proven a very successful funding management tool and they will continue during 

fiscal year 2014 and beyond. 
Chapter Four Other Information

76

Improper Payments Information Act

Narrative Summary of Implementation Efforts for FY 2013

I. The Federal Maritime Commission has not identified any program that in and of itself 

constitutes a high-risk for improper payments. Therefore, the FMC considers all of its 

payments to fall within the realm of low-risk. As such, the FMC has instituted a 

separation of duties concerning payments that has been very successful in curtailing any 

improper payments. The National Finance Center (NFC) became the agency‟s payroll 

provider in 2002 and is responsible for monitoring and reporting on any 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 2013, the FMC had no overpayments. The FMC did 

not identify any improper collections through Intergovernmental Payments and 

Collections (IPAC) collections. 

II. The FMC did not use a statistical sample to conduct its improper payment rate. The 

sample contains 100 percent of all disbursements made by the FMC. This was the case 

for all programs.

III. The FMC will continue to monitor all payments to maintain a zero dollar improper 

payment figure. To this end, the FMC will ensure that there is sufficient segregation of 

duties pertaining to payments concomitantly with closer 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.

IV. The table below represents the improper payments made by the FMC in FY 2013 with 

percentage forecasts through FY 2016. 

Improper Payments Information Act Reduction Outlook FY 2013 - 2016

(millions)

 Program FY 13

 Outlays

 FY13

 IP %

 FY13

 IP $

 FY14

 %

 FY15

 %

 FY16

 %

 Formal Proceedings $0.00 0.00 $0.00 0.00 0.00 0.00

 Inspector General $0.00 0.00 $0.00 0.00 0.00 0.00

 Equal Employment 

Opportunity $0.00 0.00 $0.00 0.00 0.00 0.00

 Operations 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

V. 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 
Chapter Four Other Information

77

and forwarded to OBF via electronic media 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 COTR 

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 

the payment authorization has been processed by OBF, the payment information is 

verified by a second staff member of OBF. 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 and a third OBF staff member audits the payment information posted in the 

financial system. 

The receipt of an invalid IPAC collection must be processed as a payment, as the funds 

have already been moved from the Treasury General Fund as a disbursement against the 

FMC‟s Agency Location Code (ALC). Invalid IPACs are then charged back to the billing 

agency to reverse the transaction. The internal controls in place remain unchanged, with 

close scrutiny of invoices and subsequent payments. 

VI. The Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible 

for the efficient and effective utilization of the authority granted the agency by Congress. 

The Chairman is responsible for designating a Chief Financial Officer and has delegated 

financial responsibility to the Director, OBF. The Director of OBF has the responsibility 

to ensure that all disbursements made by BFS on behalf of the FMC are legitimate 

expenses of the agency and that there are sufficient funds 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.

VII. 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 in 

Parkersburg, WV by BFS.

b. In FY 2013, 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. 

VIII. There are no statutory or regulatory barriers that limit the agency‟s ability to take 

corrective actions to address any improper payments.

IX. The current IPAC system does not allow an agency to refuse a collection against its ALC 

through the General Fund it deems improper. The end result is a requirement to make the 

payments during the accounting period in which the collection was made and reverse the 

collection at a later date. The ability to challenge the collection would reduce the number 

of improper collections made against the agency. 
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78

Summary of Financial Statement Audit

Summary of Financial Statement Audit

Audit opinion Unqualified

Restatement No

Material Weakness Beginning 

Balance New Resolved Consolidated Ending Balance

None 0 0 0 0 0