Rule: Audit committee members are to be members of the issuer's Board of Directors but also must be otherwise independent. Independence criteria are as follows:

• Audit committee members may not accept compensation from the issuer for consulting or advisory services.

• Audit committee members may not be an affiliated person of the issuer (affiliation means a person has the ability to influence financial decisions).

Choice "A" is correct. Board membership does not impair independence for purposes of audit committee membership (in fact, being a board member is a requirement). The independent auditor is hired and paid by the audit committee and thus is not independent, per the rule above.Choices "d", "c", and "b" are incorrect, based on the above explanation.