Since FY 1999, P&G had reported restructuring charges each quarter for Organization 2005, a five-year comprehensive corporate restructuring program. In 1995, FASB's Emerging Issues Task Force (EITF) issued a consensus opinion (EITF-94-3) that defined when certain restructuring costs could be recognized as a liability and specified increased financial statement disclosures. Yet, like other areas of accounting, there was considerable discretion in when and how a company could charge restructuring costs to earnings. In December 2001, P&G was half-way through Organization 2005. Should P&G management forecast the remaining costs of the program with enough detail to recognize a liability in FY 2002 for the balance of Organization 2005 charges? Or should it continue to recognize the remaining costs of the program each quarter as the program progressed? How should management exercise its discretion, and how should it explain the charges to investors?
