Choice "D" is correct. Public companies are required to establish an audit committee comprised of board members who are otherwise independent of the company. The audit committee is directly responsible for the appointment, compensation, and oversight of the work of the public accounting firm employed by that public company. Choice "a" is incorrect. An annual audit provides meaningful information about financial reporting but it does not address the issue of board oversight.
Choice "c" is incorrect. The independence of the Board of Directors may provide some assurance about the objectivity of the board but does not address the issue of board oversight.
Choice "b" is incorrect. An internal audit function improves the control environment but it does not engage the Board of Directors in oversight.