How does an HDMI video card handle audio?

My understanding of HDMI is that it is DVI with Audio. So if you have an HDMI video card (like on of the new ATI cards) then does this also handle the audio from your computer? If so then how is the audio routed through the video card? Or does the video card have an audio processor on board as well?

Answer:
some of them have oboard, some of them do a software based audio passthrough

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