Jan
28
Written by:
Vitullo
1/28/2010 12:20 PM
The traditional Gregorian calendar is the annual calendar that you personally measure time within the calendar year. The Gregorian solar calendar is an arithmetical calendar. It counts days as the basic unit of time, grouping them into years of 365 or 366 days; and repeats completely every 146,097 days, which fill 400 years, and which also happens to be 20,871 seven-day weeks. Of these 400 years, 303 (the "common years") have 365 days, and 97 (the leap years) have 366 days. This gives an average year length of exactly 365.2425 days, or 365 days, 5 hours, 49 minutes and 12 seconds. Now you can answer some more Trivial Pursuit questions.
A Gregorian year is divided into twelve months of irregular length, with no regular relationship among their lengths:
|
Period
|
Name
|
Days
|
|
1
|
January
|
31
|
|
2
|
February
|
28 or 29
|
|
3
|
March
|
31
|
|
4
|
April
|
30
|
|
5
|
May
|
31
|
|
6
|
June
|
30
|
|
7
|
July
|
31
|
|
8
|
August
|
31
|
|
9
|
September
|
30
|
|
10
|
October
|
31
|
|
11
|
November
|
30
|
|
12
|
December
|
31
|
The 4-4-5 Calendar Business Calendar
The 4-4-5 CALENDAR, in budgeting and accounting, is the breakdown of each month into weeks by counting the number of times Saturday occurs within each month, e.g., Jan = 4 weeks, Feb = 4 weeks, Mar = 5 weeks, Apr = 4 weeks, May = 4 weeks, Jun = 5 weeks etc. to total 52 weeks in a 12 month period. Every third month (except for the final quarter), a Saturday will occur 5 times. For the final quarter, the typical approach is to 4-5-4 quarter. All other months, Saturday will occur 4 times. In the months where Saturday occurs 5 times, it is considered a 5 week month. The 4 Saturday months will be considered as 4 week months. An Example of this Calendar for 2010 is as follows:
|
Period
|
Number of Weeks
|
Begin Date
(Always a Sunday)
|
End Date
(Always on a Saturday)
|
Number of Days
|
|
1
|
4
|
1/3/2010
|
1/30/2010
|
28
|
|
2
|
4
|
1/31/2010
|
2/27/2010
|
28
|
|
3
|
5
|
2/28/2010
|
4/3/2010
|
35
|
|
4
|
4
|
4/4/2010
|
5/1/2010
|
28
|
|
5
|
4
|
5/2/2010
|
5/29/2010
|
28
|
|
6
|
5
|
5/30/2010
|
7/3/2010
|
35
|
|
7
|
4
|
7/4/2010
|
7/31/2010
|
28
|
|
8
|
4
|
8/1/2010
|
8/28/2010
|
28
|
|
9
|
5
|
8/29/2010
|
10/2/2010
|
35
|
|
10
|
4
|
10/3/2010
|
10/30/2010
|
28
|
|
11
|
5
|
10/31/2010
|
12/4/2010
|
35
|
|
12
|
4
|
12/5/2010
|
1/1/2011
|
28
|
Traditionally, Manufacturing and Retail companies have moved to the 4-4-5 Accounting Calendar. The benefits derived from this accounting approach are the following:
· The ability to forecast and plan sales in standard weekly buckets of data.
· A consistent 13 week, 91 day quarter to measure quarter over quarter financial and operating results.
· Within manufacturing companies, aligns operational forecasts and production schedules to the accounting period thereby facilitating the planning process.
· Accounting for Payroll becomes predictably easier; assuming that the pay week begins on a Sunday and ends on a Saturday.
· Generally accounting for prepaid and accrual transactions becomes easier and less likely to record accounting errors in the general ledger.
· Assembly of annual sales plan and financial budget becomes easier with consistent predictable periods.
· Human Resources in Accounting departments enjoy a more predictable schedule, month over month, year over year.
Disadvantages of this Approach Are the Following:
· One disadvantage of the 4-4-5 calendar is that it has 364 days (7 days * 52 weeks), so approximately every 5 years there will be a 53 week year, which can make year on year comparison difficult.
· To change your year end from an Internal Revenue Service standpoint requires filing the appropriate paper work.
· Finally, if you have operations around the globe that need to consolidate into your overall financial results, consideration must be given to the impact of the calendar change for operations in other countries. This will likely cause minor closing adjustments for the 4-4-5 periods versus the statutory reporting periods for these other country operations.
Finally, consideration must be given to the software system that supports your company’s general ledgers. QAD’s Enterprise Applications and Microsoft Dynamics ERP packages will support this calendar approach.
For more information regarding setup of this functionality, you can contact:
Andrew Vitullo, CPA
Principal, Logan Consulting
312-345-8834
1 comment(s) so far...
Re: Switching to a 4-4-5 General Ledger Calendar
Colin,
The answers to your Questions below:
1. 4-4-5 is not based on a calendar year. It however, will typcailly align with reporting quarters.
2. The pattern still applies to the last fiscal period. The year does not have to end at the end of a calendar month for 10K reporting or 1120 reporting.
3. I have typically seen a 454 for the last quarter if the fiscal year begins around January 1st.
I hope this helps,
Regards,
Andy
By Vitullo on
9/21/2011 11:41 AM
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