Other mistake: If the scene in which Jack Aubrey gives the order "hard a larboard" [meaning the opposite of starboard] was indeed a rudder order (ie. turn the rudder in the direction commanded, which turns the ship the other way, in this case to starboard) the face of the compass wouldn't have rotated clockwise. The compass shows a southerly course, rotates clockwise, and eases to show an easterly course, which is a 90 degree turn to port.
Master and Commander: The Far Side of the World (2003)
1 other mistake
Directed by: Peter Weir
Starring: Russell Crowe, Paul Bettany, James D'Arcy
Continuity mistake: The position of the needle and thread lying on Peter's body differ in the wide shot and following close-up. (01:59:10)
Capt. Jack Aubrey: To wives and sweethearts - may they never meet.
Trivia: The book, from which the film is based, was actually set during the "War of 1812" between Britain and America, and in the book the Acheron is an American made vessel used by America. By contrast, in the film the Acheron is an American made ship used by the French, who are the nemesis of Britain in this film.
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Chosen answer: The flag is a signal flag, and is probably meant to signal that the ship is a whaler or engaged in fishing operations. Such flags were part of an international code, which, with some modification, is still in use today. (The flag is similar to the modern-day "Foxtrot".)