Interesting Links for 06-03-2014

[andrewducker]

• Dalai Lama at a Santa Fe ski resort: Tells waitress the meaning of life.
  (tags: happiness life meaning philosophy viaNancyLebov )
• Rolls-Royce imagines a future of robot ships
  (tags: robots boats ocean technology )
• Mesmerizing GIFs Show Cities Passing From Day to Night
  (tags: cities art time light )
• Moving out of poverty makes girls less depressed

Comments

[philmophlegm]

Firstly the terminlogy is unique to the industry - there are so many terms that are routine maritime terms to sailors but which you'll see on a trial balance. I remember we always used to send first years on that audit to a legendary old guy called Jim to learn about "demurrage". Jim was about 65, had been working for this company all his adult life, and had the broadest, most impenetrable scouse accent you can imagine - and it was one of those scouse accents where the speaker doesn't pronounce 'r' sounds correctly. This made it quite funny when the young trainee returned knowing full well what "demurrage" was, but having no idea how it should really be pronounced, or even spelled!

Secondly, with shipping companies, it is extremely difficult to get a handle on exactly what their turnover is (or should be). If the shipping companies simply owned ships and charged clients for moving their containers from A to B, that would be simple.

In practice though, shipping companies pool their resources, so that if you buy shipping from shipping company A, it might actually be in a container operated by shipping company B (and the container itself is leased from container leasing company Q), forwarded by local shipping company C (that might be a subsidiary of A) and put on a ship _owned_ by shipping company D (which isn't really connected to A, except that is part of the same loose alliance) but _managed_ by shipping company E (which might be a subsidiary of D).

Now if demurrage (basically extra costs incurred because the ship can't unload in port quickly enough) afflicts this chain, working out exactly who owes who how much becomes enormously complicated. And when this happens right at the year end, and you have cutoff issues, it just becomes so complicated.

And that's before you get to maritime insurance (which is complicated in its own right, before you even begin to consider captive self-insurance subsidiaries). Or for that matter tangible fixed asset testing (usually one of the easy bits of an audit) - much harder when the fixed assets are frickin mobile, and difficult to test for impairment. Then there's the intangible fixed assets - especially valuing (and testing for impairment) the allocated shipping slots on other ships in the various shipping alliances.

[cartesiandaemon]

Thank you, that was fascinating. Although I'm glad I don't have to solve it :)

[philmophlegm]

Tragically, the shipping company in question (Harrison Line) no longer exists. When I was auditing it, it had been in a state of managed decline for decades, but it was once one of the great independent Liverpool shipping companies. The novel and film 'Whisky Galore' was based on a real incident involving one of their ships.

[danieldwilliam]

Thanks - very, very interesting.

I hear you on the fixed asset verification. When I worked for a power company I was once asked by the new audit trainee how I knew that my fixed asset register was materially correct and that no one had stolen any of the kit.

I replied (rather haughtily, because, auditors) that there was only one asset on my fixed asset register, a 1MW power station, a massively complicated machine weighing several hundred tonnes, and unless he had urgent news that Liverpool and Manchester were suffering a huge black out I could be pretty certain that no one had stolen it. Furthermore, there was a picture of it in the file.

Mark to market on our long term power sale agreements was always the complicated bit. Both for us and for the audit team.

[philmophlegm]

Never audited a power company, although I used to advise a water company audit team on methodology issues.

"I replied (rather haughtily, because, auditors)..." Yeah, I've been on the other end of that a few times!

[danieldwilliam]

I’ve sat in on numerous conversations about the appropriate and allowed levels of rudeness to be directed towards auditors. In some organisations I’ve been in it’s felt like it was corporate policy to be utter bastards. Other, better managed places tend to agree the audit plan and outputs much better in advance. This makes for much smoother interactions at an operational level.

I genuinely try not to be discourtious towards auditors. I have often been praised for my diplomacy and restraint but the guy in the story was being a total fudd.