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The video discusses the internal audit function within a company's audit committee, which is typically composed of three members from the board of directors. Legally, the audit committee must include external members, meaning that board members cannot be employees of the organization; thus, the CEO cannot serve on the committee. The committee has a fiduciary responsibility to the shareholders and external parties and acts as a check and balance between auditors and management. The audit committee interacts directly with internal auditors, to whom the internal audit functions report.
