What responsibility does CA06 assign to management that cannot be performed by auditors?

The correct answer focuses on the responsibility assigned to management by CA06, which pertains to assessing business risks. Management plays a crucial role in evaluating risks that may affect their organization, including those related to financial reporting and operational effectiveness. This assessment involves understanding and identifying the specific risks that the business faces, which requires insider knowledge of the operations, strategic objectives, and the environment in which the business operates.

Auditors, while involved in the evaluation of the systems and controls surrounding those risks, do not possess the same level of insight into the company's day-to-day operations, strategic direction, or the business context as management does. Therefore, auditors rely on management to perform this risk assessment as part of their overall responsibilities, leading to the understanding that the assessment of business risks is fundamentally a management responsibility.

In contrast, preparing financial statements, forming an independent opinion, and creating internal controls have roles that can be supervised or influenced by auditors. They may assist in creating internal controls or review financial statements, but the actual responsibility for these items rests with management or the audit function itself, with auditors providing an independent oversight role. However, the direct responsibility for assessing business risks resides solely with management, which is a key distinction in the context of CA06 and management’s obligations.