Let's look at the meanings of the given words.
Disregard: pay no attention to; ignore.
Overlook: fail to notice.
Create: bring (something) into existence.
Demand: ask authoritatively or brusquely.
Acknowledge: accept or admit the existence or truth of.
The sentence conveys that the subject is taking steps to reduce the faults. So, they must have identified the faults. The verbs 'create' and 'demand' don't provide a coherent sentence. So, they are eliminated. The verbs 'disregard' and 'overlook' are synonymous with each other, and they don't fit in the context of the sentence. Among the given options, the verb 'acknowledge' is the correct choice.
So, the correct sentence is: We acknowledge the faults in our reporting, and we're taking steps to mitigate them.
Hence, option (e) is the correct answer.
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