TBH Co June 2012

The board of directors of TBF Co has decided to establish an audit committee for the first time. The committee will be made up of three independent non-executive directors. As the company has six non-executive directors, three will serve on the committee in the first year and the other three will then serve for the next year. Of the six non-executive directors, only one has a comprehensive knowledge of financial operations.
The committee will meet every two months. One of the non-executive directors will also serve as the chairman of the company for the next year and it has been decided that he will also be the chairman of the audit committee for this period.

According to best practice in corporate governance, which of the following statements is correct in relation to the above arrangements?

Select one:
A. It is inappropriate for the chairman of the company to be chairman of the audit committee at the same time
B. Whilst the audit committee should be made up of a majority of non-executive directors, it is undesirable that there will be no executive directors serving on it
C. The audit committee will not have the necessary competences to discharge its responsibilities over the full two-year period
D. The non-executive directors should retire annually, so no arrangements should be put in place in relation to the composition of the audit committee for the second year

I chose A but the correct answer is C. For C, I thought the commitee should have the necessary competenences for at least one year but the statement said it will not for the full two-year period which is questionable.
Can you please clarify this?