Question

A member shall be considered to have knowingly misrepresented facts in violation of rule 102 he or she knowingly ______.

a. Makes, or permits or directs another to make, materially false and misleading entries in an entity’s financial statements or records; or
b. Fails to correct an entity’s financial statements or records that are materially false and misleading when he or she has the authority to record an entry; or
c. Signs, or permits or directs another to sign, a document containing materially false and misleading information.

Answer 1

b. Fails to correct an entity's financial statements or records that are materially false and misleading when he or she has the authority to record an entry

Step-by-step explanation:

Section 102 deals with the issue of "integrity and objectivity". As per the rule, a member should act professionally and his/her judgement should be objective and not biased and should not misrepresent facts despite knowledge of them.

Under it, a member would be considered to have deliberately misinterpreted facts when he failed to correct financial statements and records of an entity, despite knowing that those are materially misstated and depict a false picture and are misleading, even though he had every authority to correct them.

Also, it would be considered knowingly misinterpretation when such a person induces someone else to make false and misleading entries in the entity's financial records.