Answer (A) is correct. The audit committee consists of outside directors who are independent of management. Its purpose is to help keep external and internal auditors independent of management and to assure that the directors are exercising due care. This committee selects the external auditors, reviews their overall audit plan, examines the results of external and internal auditing engagements, meets regularly with the chief audit executive, and reviews the internal audit activity’s engagement work schedule, staffing plan, and financial budget. These functions should increase public confidence that financial statements are fairly presented.