“guilt.” The Hebrew word can mean “guilt” (Lev. 5:2), or a “guilt offering” (Lev. 5:6, 7). The verse has an important double entendre. The fool mocks at both guilt, which he denies, and the guilt offering that would atone for his guilt, which he thinks is unnecessary. In the Old Testament, fools mocked at both their guilt and the guilt offering; today they mock Jesus, who offered himself for them. In the end, God will mock the mockers (Prov. 3:34) and they will bear their punishment (Prov. 9:12).
“good understanding.” The double entendre in the first stanza of “guilt” and “guilt offering” is reflected in the second stanza as well. The Hebrew word can refer to a “good understanding” of the way to reconciliation (HALOT Hebrew-English Lexicon), or it can mean “acceptance,” “favor,” in the sense that one who offers a sacrifice or asks for forgiveness gets acceptance from God. Thus, the verse can mean, as it is translated in the REV: “Fools mock at guilt, but among the upright is good understanding [of their guilt]. And it can also mean: “Fools mock at a guilt offering, but among the upright is acceptance [of their guilt offering].
More fully expanded, Proverbs 14:9 means that the fool mocks at his guilt and the offering that would atone for it, while the upright have a good understanding of their guilt and their sacrifice and, humbly asking for forgiveness, are accepted by God.