What defines a fiscal year for an organization?

A fiscal year is defined as a one-year period for accounting purposes that an organization uses to prepare its financial statements and report its financial performance. This period is critical for businesses and organizations as it provides a consistent timeframe for tracking financial results, planning, and decision-making.

While some organizations align their fiscal year with the calendar year, which consists of twelve months running from January 1 to December 31, not all do so. Some may choose a fiscal year that ends in a different month. Therefore, the focus is on the notion of a one-year accounting period rather than aligning with any specific calendar dates or matching with business cycles or budget cycles. This flexibility allows entities to choose a fiscal year that best suits their operational and financial planning needs.