Answer (D) 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. Engagements may be performed in the vice
president’s area of responsibility. Thus, (s)he is not independent of the
internal audit activity. The vice president is also not an outside director.