What is the process for adopting the annual budget and fiscal year timing?

• A. Budget is a ceremonial document with no reporting requirements.
• B. Budget is approved by the director alone.
• C. Budget is approved by the governing body within the fiscal year; financial reports follow.
• D. Budget is not required.

Answer: (C)

Adopting the annual budget happens as a formal governance action by the organization’s governing body, and it should occur within the fiscal year. The fiscal year is the 12-month period used for budgeting and financial reporting, and the budget for that period sets the plan for expected revenues and expenditures. By approving the budget within that timeframe, the board or council gives official spending authority for the year and provides a clear framework for operations. After the budget is approved, financial reports are prepared and shared to show how actual results compare to what was planned. This sequence—board approval within the fiscal year followed by subsequent reporting—ensures proper oversight, accountability, and transparency.