Final answer:
The statement is true; fraud auditors need to be concerned with both overstated and understated liabilities as both can misrepresent a company's financial health and mislead stakeholders.
Step-by-step explanation:
The statement "Fraud auditors should be equally concerned with liabilities being overstated as well as understated" is true. Fraud auditors are tasked with detecting, investigating, and preventing financial misstatements, whether they inflate or deflate a company's financial position. Overstated liabilities can be as problematic as understated liabilities because both situations can hide a company's true financial health and mislead stakeholders, including investors, creditors, and regulators. Overstating liabilities may suggest a more cautious approach to financial management or may be used to manipulate earnings in future periods. On the other hand, understating liabilities may artificially improve profitability metrics and financial ratios, potentially leading to investment based on misrepresented financial strength.