Regarding governance, the chairman of the audit committee is an independent director.

• A. The chairman of the audit committee is an independent director
• B. The compliance officer reports directly to the President of the board
• C. Both statements are true
• D. Both statements are false

Answer: (A)

The key idea here is that the audit committee needs independent leadership to provide unbiased oversight of financial reporting, internal controls, and the external audit. When the chair is an independent director, they are not part of management and have no material business relationships that could cloud judgment. This independence allows them to challenge management and the auditor freely, ensure accountability, and uphold the board’s duty to oversight. That backbone of neutrality is what makes the chair being an independent director the strongest and most consistent governance practice.

The other option about the compliance officer reporting directly to the President of the board isn’t aligned with standard governance norms, which typically call for the compliance function to have direct access to the board or the audit committee to preserve its independence and effectiveness. Hence, the statement that the chair of the audit committee is an independent director is the correct one.