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The internal audit function is essential for company oversight, involving an audit committee composed of board members, typically three in number. Legally, the Sarbanes-Oxley Act mandates that the committee must include external members who are not company employees, meaning the CEO cannot serve on it. The audit committee holds a fiduciary responsibility to shareholders and external interests, acting as a check and balance between auditors and management. They engage directly with internal auditors, ensuring that internal audit functions report directly to them, thus enhancing accountability and transparency within the organization.