Final answer:
The auditor's best defense against accusations of not uncovering material misstatements is that the financial statements are the client's responsibility, however, they must also comply with generally accepted auditing standards. Thus, the option b is the correct answer.
Step-by-step explanation:
The auditor's best defense when existing material misstatements in the financial statements are not uncovered during an audit is b. the financial statements are the client's responsibility. This implies that although auditors have a duty to conduct the audit with due diligence and professional care, the preparation and integrity of the financial statements ultimately lie with management and those charged with governance. It is important for auditors to conduct their audit in accordance with generally accepted auditing standards (GAAS), rather than generally accepted accounting principles (GAAP), which pertain to how financial statements should be prepared.
In the case where allegations of negligence are brought against the auditor for not detecting material misstatements, defense strategies such as contributory negligence or fraudulent misrepresentation by the client might be considered. However, the primary assertion is that the auditors have performed their professional duties as required and that management is responsible for the accuracy of the financial statements.
Referencing the investigation into Stapel's fraud, this situation highlights the importance of all involved parties, including co-authors, to have a certain degree of skepticism and understanding of the work to detect potential fraud or errors. A lack of elementary statistics knowledge contributed to the failure to identify data irregularities, emphasizing the importance of competencies in every step of the auditing and research process.