Which of the following is an essential function of an audit committee regarding fraud risk management?

Engaging in conversations about fraud with external auditors is a core function of an audit committee when it comes to managing fraud risk. This interaction with external auditors allows the committee to gain insights into potential vulnerabilities within the organization and how these might lead to fraud. By discussing fraud risks, the audit committee can better assess the effectiveness of existing controls, review financial statements for any anomalies, and ensure that there is adequate oversight in detecting and preventing fraudulent activities. This proactive approach helps foster a culture of transparency and accountability within the organization, reinforcing its commitment to ethical practices and fraud deterrence.

In contrast, monitoring financial transactions is a more passive approach that does not encompass the comprehensive role of an audit committee. Providing annual bonuses to employees is unrelated to fraud risk management, as it pertains to compensation rather than oversight or control of potential fraud. Lastly, overseeing marketing strategies is outside the jurisdiction of an audit committee, which primarily focuses on financial reporting and internal controls, rather than operational or strategic business decisions.