Answer (C) is correct. The audit committee plays an important role in maintaining the control environment by approving the charter and overseeing the work of the internal audit activity. Generally, the internal audit function is headed by the chief audit executive (CAE), who reports directly to the CEO and the board of directors. In order to improve independence, the internal audit function can report directly to the audit committee. The CAE should have direct, unhindered access to the board of directors. All of this helps achieve independence in the internal audit function.