Activities of the EntityActivities of the Entity

Activities of the Entity

1. Examples of matters that the auditor may consider when obtaining an understanding of the activities of the entity (included in the entity’s business model) include:

(e) Business operations such as:

• Nature of revenue sources, products or services, and markets, including involvement in electronic commerce such as Internet sales and marketing activities.
• Conduct of operations (for example, stages and methods of production, or activities exposed to environmental risks).
• Alliances, joint ventures, and outsourcing activities.
• Geographic dispersion and industry segmentation.
• Location of production facilities, warehouses, and offices, and location and quantities of inventories.
• Key customers and important suppliers of goods and services, employment arrangements (including the existence of union contracts, superannuation and other post- employment benefits, stock option or incentive bonus arrangements, and government regulation related to employment matters).
• Research and development activities and expenditures.
• Transactions with related parties.

(f) Investments and investment activities such as:

• Planned or recently executed acquisitions or divestitures.
• Investments and dispositions of securities and loans.
• Capital investment activities.
• Investments in non-consolidated entities, including non-controlled partnerships, joint ventures and non-controlled special-purpose entities.

(g) Financing and financing activities such as:

• Ownership structure of major subsidiaries and associated entities, including consolidated and non-consolidated structures.
• Debt structure and related terms, including off-balance-sheet financing arrangements and leasing arrangements.
• Beneficial owners (for example, local, foreign, business reputation and experience) and related parties.
• Use of derivative financial instruments.