What Are the Disclosure Requirements for a Limited Liability Company?

Question 1 

Non-profit organizations are required to disclose their financial Statement to their members, donors, and stakeholders. The financial account that is supposed to be revealed includes the Statement of the organization's financial position, which reports its assets, liabilities, and net assets ( Honggowati et al., 2017). The Statement of activities shows the income and expenses of the non-profit organization for a given time. It indicates the variations in the firm's net assets coming from income and expenses incurred in the current financial year. The cash flows statement reports the organization's cash and cash equivalent changes during the accounting period. The Statement of functional expenses helps to explain the costs incurred in each active area, such as programs, general, and fundraising in the organization. The reports help the users assess past performance, economic resources, and network resources. It gives the users a chance to note any changes in those resources of the non-profit organizations. It also helps communicate relevant information that has not been indicated in the organization's stakeholders' Statements. The report helps the stakeholder to be able to make those crucial decisions concerning the finances and assets of the organization. It also helps them to identify any discrepancies in the management of the finances of the organizations. 

Question 2 

Non-profit organizations need to give out of the information returns for the last three years and also gibe their tax exemption application form. The disclosure law requires non-profits to file annual reports, which includes financial information. It also requires them to register with the government agency and have the donor receipts in their financial Statement to include instructions to make the request (Hooks & Stent, 2019). The non-profits organization is to give copies of its annual tax returns that cover three recent years, and ensure they file their annual returns, and provide the exemption application anytime they are requested. The non-profit organizations must answer all questions in the form as the IRS uses the information to monitor the federal tax law's compliance by the non-profit organization. 

Question 3 

The reason for the disclosure requirements is to ensure that non-profits organizations comply with the laws to ensure transparency and accountability (Hyndman & McConville , 2016). It also provides that the organizations use the funds and assets they get from their donors in the most appropriate ways. These disclosure requirements help protect the public from any extortion from organizations claiming to be non-profits. This ensures that the charitable donations given by the public are used by the fully comply non-profit organizations. The public and the government may have a different sentiment about the deviation and scandal in the non-profit organizations that do not obey the disclosure law. They may complain about the improper use of the charitable fund, which may include the diversion of the funds from their intended purpose to some personal spending by the organization's management, including the directors and the stakeholders. The public may complain of the non-profit organization selling their services for a profit. This can be called extortion, as some of the services are given to the organizations as a charity. Any excessive money paid by the non-profit organizations in the form of salaries and benefits can cause the public to complain. The government can complain of the non-profit not complying with the law. Other organizations pretend to be non-profit organizations to evade paying taxes and receive charitable funds from the public. The government can use the law to withdraw many non-profit organizations' licenses that do not comply with the disclosure law. 

References 

Honggowati, S., Rahmawati, R., Aryani, Y. A., & Probohudono, A. N. (2017). Corporate governance and strategic management accounting disclosure.  Indonesian Journal of Sustainability Accounting and Management ,  1 (1), 23-30. 

Hooks, J., & Stent, W. (2019). Charities’ new non-financial reporting requirements: preparers’ insights.  Pacific Accounting Review . 

Hyndman, N., & McConville, D. (2016). Transparency in reporting on charities’ efficiency: A framework for analysis.  Nonprofit and Voluntary Sector Quarterly ,  45 (4), 844-865.