One of the requirements of a Nonprofit Organization is that it produces a sample financial statement for them. They will be able to see how the organization is doing financially.
A Non Profit Organization is a charitable and voluntary group that works on the basis of social justice. It is the group of individuals or organizations that are working for the purpose of improving the social conditions of others. Nonprofit organizations have nothing to do with philanthropy.
The fact that a Non Profit organization is not registered as a for profit business means that they are not allowed to use their financial statements as a marketing tool for their organization. It would be against the rules for an organization to conduct business transactions, as a Non Profit organization has no means of doing so.
The non-profit organizations are not doing anything illegal or wrong in producing their financial statement. It is important that they make an effective and fully transparent financial statement. The managers of these organizations must be informed about all their income, expenditures, and assets. These documents are available for the public.
They should be allowed to use these financial statements for the benefit of the organization. Any person can write a check, make a donation, and distribute it among the members of the organization. However, the information is kept in secrecy. This is the reason why it is a recommended requirement that a sample financial statement should be prepared.
The financial statement is an instrument of providing accurate information to its donors. It is a means of giving them an insight on how the organization is going to get money for the operating expenses.
In general, the Non Profit Organizations is subjected to the restrictions of FECA, which is an act that regulates the trade and commerce. This acts on the basis of protecting the rights of the people and the public interest.
The non-profit organizations are given a chance to have a professional audit done by a trained auditor. This audit is done to find out if the financial statements are being followed properly.