Latitude Bhd is a debt issuer whose business is mainly concentrated in securitizing of a portfolio of underlying investments. The company finance their purchase by issuing of listed debt, limited by collateral. Since Latitude Bhd is financing their business through debt issuance, the repayment of the debt is very much dependent upon the performance of the company's underlying investments. Nevertheless, the debt-holders of the debt issued by Latitude Bhd are the ultimate bearer of the risks and enjoying rewards associated with the ownership of the underling investments. Due to the specific nature of the underlying investments, the degree of risks of individual debts may vary. Latitude Bhd does not consider its debt-holders as the primary users of the financial statements. Thus, the company does not wish to provide disclosure of the debt- holders' exposure to risks in the financial statements, distinctively from the risks faced by the company's shareholders in accordance with MERS 7: Financial Instruments: Disclosures. The directors of Latitude Bhd have read numerous reports which discuss excessive disclosure in the annual report of companies. Accordingly, the directors were of the view that the instances discussed above should not be disclosed in the financial statements of Latitude Bhd as it would result in the annual report of the company becoming "excessive". In the most recent financial statements, Latitude Bhd's liquidity position has worsened. The company was in the high risk of breaching the loan covenant. The situation faced by Latitude Bhd has begun to raise alarms that the directors described the instance as "unsatisfactory in the internal management report. Nevertheless the views of the directors remain intact of not disclosing this instance in the company's financial statements. Discuss the directors of Latitude Bhd's views that no further information regarding the incidence above should be disclosed in the financial statements, because doing so would cause "excessive" annual report and that the information disclosed would cause confusion to the users of financial statements. Please discuss with reference to requirements and paragraphs in ERS 7 and FRS 9. Latitude Bhd is a debt issuer whose business is mainly concentrated in securitizing of a portfolio of underlying investments. The company finance their purchase by issuing of listed debt, limited by collateral. Since Latitude Bhd is financing their business through debt issuance, the repayment of the debt is very much dependent upon the performance of the company's underlying investments. Nevertheless, the debt-holders of the debt issued by Latitude Bhd are the ultimate bearer of the risks and enjoying rewards associated with the ownership of the underling investments. Due to the specific nature of the underlying investments, the degree of risks of individual debts may vary. Latitude Bhd does not consider its debt-holders as the primary users of the financial statements. Thus, the company does not wish to provide disclosure of the debt- holders' exposure to risks in the financial statements, distinctively from the risks faced by the company's shareholders in accordance with MERS 7: Financial Instruments: Disclosures. The directors of Latitude Bhd have read numerous reports which discuss excessive disclosure in the annual report of companies. Accordingly, the directors were of the view that the instances discussed above should not be disclosed in the financial statements of Latitude Bhd as it would result in the annual report of the company becoming "excessive". In the most recent financial statements, Latitude Bhd's liquidity position has worsened. The company was in the high risk of breaching the loan covenant. The situation faced by Latitude Bhd has begun to raise alarms that the directors described the instance as "unsatisfactory in the internal management report. Nevertheless the views of the directors remain intact of not disclosing this instance in the company's financial statements. Discuss the directors of Latitude Bhd's views that no further information regarding the incidence above should be disclosed in the financial statements, because doing so would cause "excessive" annual report and that the information disclosed would cause confusion to the users of financial statements. Please discuss with reference to requirements and paragraphs in ERS 7 and FRS 9
