Home > Fiscal year
A fiscal year or financial year is a 12-month period used for calculating annual ("yearly") financial reports in businesses and other organizations. In many jurisdictions, regulatory laws regarding accounting require such reports once per twelve months, but do not require that the twelve months consitute a calendar year (i.e. January to December). However, a new company or business has to decide at the beginning on which month their fiscal year will start, and then stay with that.Such fiscal years are typically numbered using a calendar year, either the one in which the twelve-month period starts or the one in which it ends. For example, the United States Government fiscal year begins on October 1 of the previous calendar year and ends on September 30 of the year with which it is numbered.
Companies that are units within a "group" of businesses must all use the same fiscal year, otherwise it would be possible to shift entries between units with different fiscal years, so the same resources would be counted more than once or not at all, making the annual report of the group's finances misleading.
In the " Enron scandal" in the U.S. in 2001- 2002, that energy conglomerate was discovered to have got around the laws to prevent that kind of fraud by setting up dummy businesses that passed the bookkeeping entries back and forth, increasing their size on each pass, thus shifting the bogus numbers in space instead of in time.
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