Like hundreds of other companies, Manhattan Associates restated its earnings last year. Between 1999 and 2004, the supply-chain software maker overstated its net profit by $7 million, or more than $1 million a year, because of how it accounted for a tax credit.
You might think that's another piece of evidence that Sarbanes-Oxley, the corporate compliance and financial transparency act passed nearly four years ago, is doing its job. But Manhattan Associates CEO Pete Sinisgalli says you'd be wrong: The restatement surfaced through internal controls the company had already set up, independent of Sarbanes-Oxley.
For Sinisgalli and others, the situation illustrates what is misguided about Sarbanes-Oxley. The law may have restored investor confidence, but Section 404 -- the controversial provision requiring reports on and testing of internal controls -- "adds a duplicate step to what you've already done," says Sinisgalli, who joined Manhattan Associates as CEO in 2004.
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