A business must provide periodic financial performance reports to investors, creditors and other users. This information informs the users what the company did during a specific period of time and allows them to gauge the wellbeing of the company. These set periods of time (fiscal periods) usually extend over an annual basis, but can also occur monthly or quarterly.

Sometimes a tension arises between providing timely (frequent) information to users and providing objective accounting records. Generally, users tend to prefer shorter fiscal periods (and so more frequent reports) but this can result in accounting methods that are more subjective and arbitrary than those used over a longer period. This happens because the shorter periods allowed little or no time for an audit.

In Ontario, all businesses are required to file annual financial statements with their yearly tax returns.

Determining your reporting cycle

Companies can determine the start and close dates of their annual and quarterly reporting cycles. Some align their year-ends with the calendar while others choose a different 12-month period, called a fiscal year. Usually the main reason to choose a cycle other than the calendar year is to accommodate a business where the operations are seasonal. In such a case, it makes sense to align the reporting cycle with the flow the sales season in order to capture the height of your business activity in one report.


Markle, K. (2004, August). Introduction to Accounting. Presentation delivered at Schulich School of Business, York University, Toronto, Canada.
Pratt, Jamie. (2003). Financial Accounting in an Economic Context. New York: John Wiley & Sons.
Ontario Ministry of Revenue (2003, November). Financial Statement Requirements. Retrieved November 1, 2008, from http://www.rev.gov.on.ca/english/bulletins/ct/4002.html.