Fiscal year - the period of time for which the budget should be set in the form of a scheme of income and expenses of business entities.
Fiscal Year Definition
In the Russian Federation, in accordance with the Budget Code, like a calendar year, the financial year lasts 12 months (January-December).
In some countries, in accordance with the laws in force in their territories, this accounting period differs from the calendar. For example, the fiscal year in the United States is from October to September.
Organization of budgeting
Fiscal year - a period (period of time) during which approved financial plans must act and execute. These planning documents take the form of estimates, budgets, as well as the balance of income and expenses.
As mentioned above, a fiscal year is basically equated with a calendar year. At the same time, its beginning and end are recorded in the relevant budget legislation. The establishment of its terms is affected not so much by traditions that have historically developed in a particular country as the focus of state financial policy on achieving a specific goal.
Often a fiscal year is considered to be a base year if its indicators are taken as a basis for financial and budget planning.
The relationship of budgeting with the financial year
Formation, consideration, followed by approval and execution of a budget at any level are closely linked with the financial year.
Thus, a clear definition of the period for which the budget is drawn up, as well as compliance with the unity of the display of income and expenses in it, allows to ensure the validity, completeness and reliability of indicators. Moreover, this relationship allows you to identify weaknesses in the budget system with the direction of planning to align all levels of indicators.
Since the fiscal year consists of 12 months, after this period one grace month can be provided, during which all operations on obligations must be completed within the framework of full budget execution.
In practice, within the framework of budget planning, these two concepts are used: “budget period” and “financial period”.
What is a fiscal year has already been discussed above, but on the budget period it is necessary to dwell in more detail.
What is a budget period?
This is a period of time that covers all stages of budgeting. The first stage of this period is the beginning of drafting a planning document, which should be completed by approval of a report on its implementation. The duration of this time period is three years.
This economic category consists of four stages. The first stage is the preparation of the draft, the second is its consideration with subsequent approval, the third is the direct execution of the budget, the fourth is the final, which consists of the preparation, consideration and approval of a report on its implementation. All stages are carried out in a specific time frame.
Legislation
The current budget legislation of the Russian Federation regulates the entire planning process and revenue spending. So, in the budget should be provided for a trust fund, which is formed at the expense of target funds received in the framework of individual estimates.
There is another concept - an emergency budget.On this issue, financial legislation provides for the possibility of establishing a budget that has a special legal regime in the event of a state of emergency in Russia. In this case, emergency spending of funds occurs in a manner different from the usual one characteristic of a peaceful and calm time. The formation of the emergency budget is regulated by relevant law.
The concept of "Consolidated budget", which is a set of budgets of lower levels (for example, local and constituent entities of the Russian Federation). So, in accordance with the RF BC (Article 16), this financial category consists of a complex of federal and local levels. This economic category is often used for analysis and calculation.
And finally, it is necessary to mention the minimum budget. Financial legislation introduces this concept when calculating the volume of revenues of the consolidated budget of the lowest level to cover the minimum necessary expenses, which must be guaranteed by higher state bodies. At the same time, expenses, if they are insufficient to cover the necessary income, may be covered by deductions from subsidies and subventions.
Conclusion
Thus, it should be noted that the financial (fiscal) year both in Russia as a whole and for business entities in particular has the same duration, which is determined by the state. For example, answering the question, when does the LLC financial year end, you can confidently talk about the period from January 1 to December 31.
It is for this period that business entities rely when calculating the annual financial statements. The main regulatory acts governing accounting and taxation also require reports once a year (twelve months).
However, if we consider not business, but, for example, educational institutions, we can say that the fiscal year begins in the fall (September 1), and ends in the summer (June-July). Therefore, all financial plans for educational institutions are approved precisely during these periods.
To summarize the above, it should be noted that this article is considered the current fiscal year.
