A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many jurisdictions require company financial reports to be prepared and published on an annual basis but generally not the reporting period to align with the calendar year (1 January to 31 December). Taxation laws generally require accounting records to be maintained and taxes calculated on an annual basis, which usually corresponds to the fiscal year used for government purposes. The calculation of tax on an annual basis is especially relevant for direct taxes, such as income tax. Many annual government fees—such as council tax and license fees, are also levied on a fiscal year basis, but others are charged on an anniversary basis.

Some companies, such as Cisco Systems,[1] end their fiscal year on the same day of the week each year: the day that is closest to a particular date (for example, the Friday closest to 31 December). Under such a system, some fiscal years have 52 weeks and others 53 weeks.[2]

The calendar year is used as the fiscal year by about 65% of publicly-traded companies in the United States and for most large corporations in the United Kingdom.[3] That is the case in many countries around the world with a few exceptions such as Australia, New Zealand, and Japan.[4]

Many universities have a fiscal year which ends during the summer to align the fiscal year with the academic year (and, in some cases involving public universities, with the state governments fiscal year) and also because the university is normally less busy during the summer months. In the Northern Hemisphere, that is July to the next June. In the Southern Hemisphere, that is the calendar year, January to December.

Fiscal Year, “Calendar Fiscal”

Importance of a fiscal year

Fiscal years are important because they help internal and external stakeholders know when they can expect to prepare or receive certain financial information. For many industries, working on a unique fiscal calendar rather than the traditional Gregorian calendar provides substantial benefits. For example, school districts often align their fiscal year with the school year to make it easier for administrators, teachers, students, parents and other stakeholders to track events. Other broad benefits include:

What is a fiscal year?

A fiscal year is a one-year period of time related to a companys financial budgeting and reporting. Unlike a traditional Gregorian calendar, the fiscal year may not begin on January 1 and end on December 31. Instead, the company establishes dates that work best for their industry and company. In most cases, the fiscal year constitutes 365 days (and 366 days in a leap year), so it still coincides with the traditional Gregorian calendar over multiple years and decades.

Types of business calendars

While many businesses choose their own fiscal years to best align with their needs and objectives, there are a few common designations youll see across industries:

The ISO year

The ISO year, or ISO week-numbering year, consists of 52 or 53 full weeks and has no months. Governments and businesses often employ this calendar for their fiscal years. According to this system, the 52 or 53 weeks of the year all receive a number, and the days of the week, which start on Monday, are also numbered from one to seven. To refer to a specific day in the year, for instance, youll write “2020-W05-6,” which means the sixth day of the fifth week of the year 2020.

Systems that date by weeks often have a beginning of the year that starts in the middle of the week, which makes it difficult to identify the first week of the year. For this reason, the first week of the ISO year is the week that contains the first Thursday. This means that if January 1 falls on a Friday, its part of the current year. However, if it falls on a Monday, it forms part of week one of the new year.

The broadcast calendar

As the name indicates, the broadcasting industry bases its fiscal year on this calendar. A broadcast calendar week always starts on a Monday and ends on a Sunday, and there can be either four or five weeks in a broadcast calendar month. This translates to either 28 or 35 days in a month. The first week of the broadcast calendar year always contains the first of the month as per the Gregorian calendar.

This means that if January 1 falls on a Tuesday, the first day of the new year in the broadcast calendar will fall on Monday, December 31 of the preceding year. As is the case with the ISO year, one refers to the weeks of the broadcast calendar year by number. For instance, Week two, Day three refers to the Wednesday in the second week of the year.

The 4-4-5 calendar

The 4-4-5 calendar consists of four quarters that are made up of 13 weeks each. These 13 weeks, in turn, consist of two four-week months and one five-week month. Alternatively, you can also group the 13 weeks into one five-week month and two four-week months (5-4-4) or one four-week month, one five-week month and one four-week month (4-5-4).

This calendar is popular with retailers, as it allows them to compare sales across quarters with the same number of days, and also compare weeks and months in different years with the same week days. In addition, this calendar allows manufacturers to effectively plan shifts, as the end date of every period always falls on the same day of the week and every period is the same length.

A disadvantage, however, is that you cannot effectively do month-to-month comparisons, as the months within a quarter are not all the same length. You can do week-to-week comparisons, though. In addition, the 4-4-5 calendar contains only 364 days per year. This means that every five to six years, this calendar contains an extra week, which also makes annual comparisons over longer periods difficult.

Examples of fiscal calendars

Some companies establish fully independent fiscal calendars aligned with the specific needs of their organization, while others use a general fiscal calendar that most others in their industry also use. Review this list of a few of the most common business calendars across major industries:

FAQ

What is the fiscal year this year?

The financial year from 1 April 2020 to 31 March 2021 would generally be abbreviated as FY 2020-21, but it may also be called FY 2021 on the basis of the ending year. Companies following the Indian Depositary Receipt (IDR) are given freedom to choose their financial year.

What are the dates for fiscal year 2021?

Fiscal year 2021 means the 52 weeks ended January 29, 2022. Fiscal year 2021 or “FY 2021” means the fiscal year ending June 30, 2021. Fiscal year 2021 or “FY 2021” means the period beginning July 1, 2020, and ending June 30, 2021.

What is an example of a fiscal year?

A 12-month fiscal year is defined as a 12-month period that ends on the last day of the month except for December. This is because a fiscal year ending Dec 31 is just a calendar year. A 12-month fiscal year would be Feb 1-Jan 31 or July 1-June 30.

What is a fiscal year vs calendar year?

A calendar year always begins on New Year’s Day and ends on the last day of the month (Jan. 1 to Dec. 31 for those using the Gregorian calendar). A fiscal year can start on any day and end precisely 365 days later.

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