Write a report entitled “[Name of cargo type]: a Case Study and Critical Evaluation of Shipboard Regulation and Safe Operational Practice.”

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[Name of cargo type]: a Case Study and Critical Evaluation of Shipboard Regulation and Safe Operational Practice

INSTRUCTIONS
Write a report entitled “[Name of cargo type]: a Case Study and Critical Evaluation of Shipboard Regulation and Safe Operational Practice.”

You are to choose one of the cargoes from the list below. These are known to have safety and/or environmental concerns around loading, discharge, and carriage by sea. All such cargoes have operational practices and regulations embedded in SOLAS, MARPOL and industry guides for safety and environmental protection.

Word limit 2,000 words +/- 10%

LIST OF CARGOES (choose ONE only) – maybe discuss on RoRo?
• Group A dry bulk cargoes: suggested case studies The Black Rose 2009 and Bulk Jupiter 2015
• Roll-on roll-off vehicle carriers: suggested case studies MV Golden Ray 2019 and Felicity Ace 2022
• Group B dry bulk cargoes: suggested case studies wood pellets – mv Corina 2015; -fertiliser – mv Cheshire 2017; Coal – several reports are available of unnamed ship incidents.
• Packed containers: suggested case studies Eugen Maersk 2013 and X-Press Pearl 2021
• Timber deck cargoes: suggested case studies Graig Rotterdam 2016 and Mimasaka 2010; several reports are available of unnamed ship incidents

SUMMATIVE SUBMISSION – REPORT STRUCTURE
Your Report must be structured as shown below. Figures (images, charts and diagrams are all called figures) and tables must be numbered, given a title and source, and embedded in the text, NOT placed as an appendix (unless exceptionally large). Start each major section on a new page, by inserting a page break at the top. Number your pages. Use the Harvard system of referencing and Ariel 12-point font with line and a half spacing on A4 page size. Must use textbooks and academic sources.

What is your objective/interest by joining and what makes you qualify for a position in this department?

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DISCUSSION ESSAY

What is your objective/interest by joining and what makes you qualify for a position in this department?

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

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INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Stockholders General Ring Corporation

Opinion
We have audited the financial statements of General Ring Corporation, which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of General Ring Corporation as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of General Ring Corporation, and have fulfilled our other ethical responsibilities, in accordance with the relevant ethical requirements related to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about General Ring Corporation’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

In performing an audit in accordance with GAAS, we:
• Use professional judgment and exercise professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of General Ring Corporation’s internal control.

Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about General Ring Corporation’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Auditor’s Opinion
Basis for Opinion

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and internal control related matters identified during our audit.

Describe the parts of the standard unmodified opinion audit report for nonpublic entities under AICPA auditing standards.

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STANDARD UNMODIFIED OPINION AUDIT REPORT FOR NONPUBLIC ENTITIES

Describe the parts of the standard unmodified opinion audit report for nonpublic entities under AICPA auditing standards.

Describe the parts of the standard unmodified opinion audit report for nonpublic entities under AICPA auditing standards. Specify the conditions required to issue the standard unmodified opinion audit report.

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AUDIT REPORTS

LEARNING OBJECTIVES
After studying this chapter, you should be able to
3-1 Describe the parts of the standard unmodified opinion audit report for nonpublic entities under AICPA auditing standards.
3-2 Specify the conditions required to issue the standard unmodified opinion audit report.
3-3 Understand reporting on financial statements and internal control under PCAOB auditing standards.
3-4 Describe the five circumstances when an emphasis-of-matter explanatory paragraph or nonstandard wording is appropriate to include in an unmodified opinion audit report.
3-5 Identify the types of audit reports that can be issued when an unmodified opinion is not justified.
3-6 Explain how materiality affects audit reporting decisions.
3-7 Draft appropriately modified opinion audit reports under a variety of circumstances.
3-8 Determine the appropriate audit report for a given audit situation.
3-9 Understand the use of international accounting and auditing standards by U.S. companies.

For the largest 10 firms listed in the table, how many firms generate the largest percentage of their revenue from consulting? Discuss why some firms may have larger consulting practices than other firms.

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Holmes’ Actions Resulting in Failure to Comply With the Principle

2-21 (OBJECTIVE 2-6, 2-7) The following questions require you to access AICPA standards (www.aicpa.org), PCAOB auditing standards (pcaobus.org), and IAASB auditing standards (www.iaasb.org).
a. Your audit supervisor stated it was important for you to understand AU-C 315. Which organization is the source of the standard? What is the subject of the standard?
b. The PCAOB website has a reference tool that allows you to find analogous ASB standards and IAASB standards. What is the analogous AICPA (ASB) standard for PCAOBAS 2305? What is the analogous IAASB standard? Explain.
c. Your audit supervisor indicated that you would be relying on work done by internal auditors and suggested that you look at SAS No. 128. What AU-C section is associated with SAS No. 128?

2-22 (OBJECTIVE 2-1) Review the information in Table 2-1 on page 25 and discuss the following:
a. For the largest 10 firms listed in the table, how many firms generate the largest percentage of their revenue from consulting? Discuss why some firms may have larger consulting practices than other firms.
b. In recent years, consulting has been the fastest-growing revenue source for the largest audit firms. Discuss whether you believe the growth in consulting improves or negatively impacts audit quality.

What is the main objective of the audit of an entity’s financial statements? Given the CPA firm is auditing financial statements, why would they need to under- stand anything about the client’s business?

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DISCUSSION QUESTIONS AND PROBLEMS

2-16 (OBJECTIVE 2-7) Sarah O’Hann enjoyed taking her first auditing course as part of her undergraduate accounting program. While at home during her semester break, she and her father discussed the class, and it was clear that he didn’t really understand the nature of the audit process as he asked the following questions:
a. What is the main objective of the audit of an entity’s financial statements?
b. Given the CPA firm is auditing financial statements, why would they need to under- stand anything about the client’s business?
c. What does the auditor do in an audit other than verify the mathematical accuracy of the numbers in the financial statements?
d. The audit represents the CPA firm’s guarantee about the accuracy of the financial statements, right?
e. Isn’t the auditor’s primary responsibility to detect all kinds of fraud at the client? If you were Sarah, how would you respond to each question?

2-17 (OBJECTIVE 2-8) For each of the following procedures taken from the quality control manual of a CPA firm, identify the applicable element of quality control from Table 2-3 on page 39.
a. All potential new clients are reviewed before acceptance. The review includes consultation with predecessor auditors and background checks. All new clients are ap- proved by the firm management committee, including assessing whether the firm has the technical competence to complete the engagement.
b. The partners accept responsibility for leading and promoting a quality assurance culture within the firm and for providing and maintaining a quality assurance manual and all other necessary practical aids and guidance to support engagement quality.
c. Each office of the firm shall be visited at least annually by review persons selected by the director of accounting and auditing. Procedures to be undertaken by the reviewers are illustrated by the office review program.
d. Appropriate accounting and auditing research requires adequate technical reference materials. Each firm professional has online password access through the firm’s website to electronic reference materials on accounting, auditing, tax, SEC, and other technical information, including industry data.
e. Audit engagement team members enter their electronic signatures in the firm’s engagement management software to indicate the completion of specific audit program steps. At the end of the audit engagement, the engagement management software will not allow archiving of the engagement file until all audit program steps have been electronically signed.
f. At all stages of any engagement, an effort is made to involve professional staff at appropriate levels in the accounting and auditing decisions. Various approvals of the manager or senior accountant are obtained throughout the audit.
g. Each audit engagement must include a concurring partner review of critical audit decisions.
h. No employee will have any direct or indirect financial interest, association, or relationship (for example, a close relative serving a client in a decision-making capacity) not otherwise disclosed that might be adverse to the firm’s best interest.
i. Individual partners submit the nominations of those persons whom they wish to be considered for partner. To become a partner, an individual must have exhibited a high degree of technical competence; must possess integrity, motivation, and judgment; and must have a desire to help the firm progress through the efficient dispatch of the job responsibilities to which he or she is assigned.
j. Through our continuing employee evaluation and counseling program and through the quality control review procedures as established by the firm, educational needs are reviewed and formal staff training programs modified to accommodate changing needs. At the conclusion of practice office reviews, apparent accounting and auditing deficiencies are summarized and reported to the firm’s director of personnel.

2-18 (OBJECTIVES 2-6, 2-7) You have been asked to make a presentation in your International Business class about how globalization is impacting the auditing profession. In preparation, you met with your auditing professor and discussed these questions:
a. What organization is responsible for establishing auditing standards internationally?
b. What organizations are responsible for establishing U.S. auditing standards used
by CPA firms when auditing financial statements prepared by organizations based in the U.S.?
c. To what extent are AICPA auditing standards and international auditing standards similar?
d. What is the process the AICPA Auditing Standards Board (ASB) uses to develop AICPA auditing standards?
e. To what extent are PCAOB auditing standards impacted by international standards?
f. What auditing standards should an audit firm follow when they audit a client located in a foreign country that is listed on both a foreign stock exchange and a U.S. stock exchange?

Briefly outline key points that you would make in your presentation to address these questions.

2-19 (OBJECTIVE 2-6) For each engagement described below, indicate whether the engagement is likely to be conducted under international auditing standards, AICPA auditing standards, or PCAOB auditing standards.
a. An audit of a public company headquartered in the U.S. listed only on U.S. exchanges.
b. An audit of a not-for-profit organization with operations in Pennsylvania.
c. An audit of a private company in the U.S. with public debt traded on a U.S. exchange.
d. An audit of a U.S. private company to be used for a loan from a publicly traded bank.
e. An audit of a German private company with public debt in Germany.
f. An audit of an international nonprofit relief agency headquartered in Switzerland.
g. An audit of a U.S. broker-dealer registered with the SEC.
h. An audit of a Mexico-based company whose stock is listed on stock exchanges in the U.S. and whose financial statements will be filed with the SEC.
i. An audit of a U.S. public company that is a subsidiary of a Japanese company that will be used for reporting by the parent company in Japan.

2-20 (OBJECTIVE 2-7) Ray, the owner of a small company, asked Holmes, a CPA, to conduct an audit of the company’s records. Ray told Holmes that an audit was to be completed in time to submit audited financial statements to a bank as part of a loan application. Holmes immediately accepted the engagement and agreed to provide an auditor’s report within three weeks. Ray agreed to pay Holmes a fixed fee plus a bonus if the loan was granted. Holmes hired two accounting students to conduct the audit and spent several hours telling them exactly what to do. Holmes told the students not to spend time reviewing internal controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that supported Ray’s financial statements. The students followed Holmes’s instructions and after two weeks gave Holmes the financial statements, which did not include footnotes. Holmes reviewed the statements and prepared an unmodified auditor’s report. The report did not refer to generally accepted accounting principles or to the consistent application of such principles.

Briefly describe each of the principles underlying AICPA auditing standards and indicate how the action(s) of Holmes resulted in a failure to comply with each principle.

Which of the following provides authoritative guidance for the auditor of a nonpublic company?

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 BECKER CPA EXAM REVIEW

2-15 (OBJECTIVES 2-3, 2-4, 2-6, 2-7) The following questions address CPA firms and entities that regulate them. Choose the best response.

a. An auditor of an entity subject to the rules of the SEC must conduct the financial statement audit in accordance with
(1) PCAOB standards.
(2) Statements on Standards for Accounting and Review Services.
(3) International Auditing Standards.
(4) Generally Accepted Government Auditing Standards.

b. Which of the following provides authoritative guidance for the auditor of a nonpublic company?

(1) An article in the Journal of Accountancy that discusses new audit requirements
(2) Information obtained from continuing professional education programs
(3) Publication from state CPA societies that provides questions and answers on frequently asked audit questions
(4) Statements on Auditing Standards

c. The Public Company Accounting Oversight Board (PCAOB) has the duty to
(1) select the public accounting firm for the issuer’s annual audit.
(2) establish rules related to the preparation of audit reports for nonissuers.
(3) conduct investigations concerning registered public accounting firms.
(4) conduct disciplinary proceedings for nonpublic accounting firms.

Describe the role of International Standards on Auditing. What is the relationship between International Standards on Auditing and U.S. auditing standards?

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THE AUDITING PROFESSION

MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS

2-13 (OBJECTIVE 2-7) The following questions deal with auditing standards. Choose the best response.

a. Which of the following best describes what is meant by U.S. auditing standards?
(1) Acts to be performed by the auditor
(2) Measures of the quality of the auditor’s performance
(3) Procedures to be used to gather evidence to support financial statements
(4) Audit objectives generally determined on audit engagements Securities and Exchange Commission (SEC)—a federal agency that oversees the orderly conduct of the securities markets; the SEC assists in providing investors in public corporations with reliable information upon which to make investment decisions Statements on Auditing Standards (SASs)—pronouncements issued by the
Auditing Standards Board of the AICPA applicable to audits of entities other than public issuers

2-1 (OBJECTIVES 2-1, 2-2, 2-8) What major characteristics of the organization and conduct of CPA firms permit them to fulfill their social function competently and independently?
2-2 (OBJECTIVE 2-3) What is the role of the Public Company Accounting Oversight Board (PCAOB)? How does the PCAOB provide oversight of audit firms?
2-3 (OBJECTIVE 2-4) Describe the role of the SEC in society and discuss its relationship with and influence on the practice of auditing.
2-4 (OBJECTIVE 2-5) What are the purposes of the AICPA Statements on Standards for Attestation Engagements?
2-5 (OBJECTIVES 2-3, 2-5, 2-6) Who is responsible for establishing auditing standards for audits of U.S. public companies? Who is responsible for establishing auditing standards for audits of U.S. private companies? Explain.
2-6 (OBJECTIVE 2-6) Describe the role of International Standards on Auditing. What is the relationship between International Standards on Auditing and U.S. auditing standards?
2-7 (OBJECTIVES 2-4, 2-7) Distinguish between auditing standards and generally accepted accounting principles, and give two examples of each.
2-8 (OBJECTIVE 2-7) The Responsibilities principle requires that auditors be responsible for having appropriate competence and capabilities to perform the audit. What are the various ways in which auditors can fulfill this principle?
2-9 (OBJECTIVE 2-7) Auditing standards have been criticized by different sources for failing to provide useful guidelines for conducting an audit. The critics believe the standards should be more specific to enable practitioners to improve the quality of their performance. Evaluate this criticism of auditing standards.
2-10 (OBJECTIVE 2-8) What is meant by the term quality control as it relates to a CPA firm?
2-11 (OBJECTIVE 2-8) The following is an example of a CPA firm’s quality control procedure requirement: “Any person being considered for employment by the firm must have completed a basic auditing course and have been interviewed and approved by an audit partner of the firm before he or she can be hired for the audit staff.” Which element of quality control does this procedure affect and what is the purpose of the requirement?
2-12 (OBJECTIVE 2-8) State what is meant by the term peer review. What are the implications of peer review for the profession?

b. The Responsibilities principle underlying AICPA auditing standards includes a requirement that
(1) the audit be adequately planned and supervised.
(2) the auditor’s report state whether or not the financial statements conform to generally accepted accounting principles.
(3) professional judgment be exercised by the auditor.
(4) informative disclosures in the financial statements be reasonably adequate.

c. Who establishes auditing standards applicable to private companies and other non- public entities in the U.S.?
(1) The Private Company Audit Standards Board
(2) The Financial Accounting Standards Board
(3) The Auditing Standards Board of the AICPA
(4) The Public Company Accounting Oversight Board

2-14 (OBJECTIVE 2-8) The following questions concern quality control standards. Choose the best response.

a. The nature and extent of a CPA firm’s quality control policies and procedures depend on
The CPA
Firm’s Size
The Nature of the
CPA Firm’s Practice
Cost–Benefit
Considerations
(1) Yes Yes Yes
(2) Yes Yes No
(3) Yes No Yes
(4) No Yes Yes

b. Which of the following is an element of a CPA firm’s quality control system that should be considered in establishing its quality control policies and procedures?
(1) Complying with laws and regulations
(2) Using statistical sampling techniques
(3) Managing human resources
(4) Considering audit risk and materiality

c. One of a CPA firm’s basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this objective is provided through
(1) continuing professional education.
(2) a system of quality control.
(3) a system of peer review.
(4) compliance with generally accepted reporting standards.

Who is responsible for establishing auditing standards for audits of U.S. public companies? Who is responsible for establishing auditing standards for audits of U.S. private companies? Explain.

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QUALITY CONTROL

OBJECTIVES 2-1, 2-2, 2-8) What major characteristics of the organization and conduct of CPA firms permit them to fulfill their social function competently and independently?

2-2 (OBJECTIVE 2-3) What is the role of the Public Company Accounting Oversight Board (PCAOB)? How does the PCAOB provide oversight of audit firms?

2-3 (OBJECTIVE 2-4) Describe the role of the SEC in society and discuss its relationship with and influence on the practice of auditing.

2-4 (OBJECTIVE 2-5) What are the purposes of the AICPA Statements on Standards for Attestation Engagements?

2-5 (OBJECTIVES 2-3, 2-5, 2-6) Who is responsible for establishing auditing standards for audits of U.S. public companies? Who is responsible for establishing auditing standards for audits of U.S. private companies? Explain.

2-6 (OBJECTIVE 2-6) Describe the role of International Standards on Auditing. What is the relationship between International Standards on Auditing and U.S. auditing standards?2-7 (OBJECTIVES

2-4, 2-7) Distinguish between auditing standards and generally accepted ac- counting principles, and give two examples of each.

2-8 (OBJECTIVE 2-7) The Responsibilities principle requires that auditors be responsible for having appropriate competence and capabilities to perform the audit. What are the various ways in which auditors can fulfill this principle?

2-9 (OBJECTIVE 2-7) Auditing standards have been criticized by different sources for failing to provide useful guidelines for conducting an audit. The critics believe the standards
should be more specific to enable practitioners to improve the quality of their performance. Evaluate this criticism of auditing standards.

2-10 (OBJECTIVE 2-8) What is meant by the term quality control as it relates to a CPA firm?

2-11 (OBJECTIVE 2-8) The following is an example of a CPA firm’s quality control procedure requirement: “Any person being considered for employment by the firm must have completed a basic auditing course and have been interviewed and approved by an audit partner of the firm before he or she can be hired for the audit staff.” Which element of quality control does this procedure affect and what is the purpose of the requirement?

2-12 (OBJECTIVE 2-8) State what is meant by the term peer review. What are the implications of peer review for the profession?