A&B auditor to help
navigate risk

Paul Ito at a glance » Age: 34 » Joined Alexander & Baldwin Inc. as internal audit director at the start of this month. » A graduate of the University of Hawaii in 1992, Ito left the islands for California in 2000. He currently works for A&B out of Oakland, Calif., but will move back to Hawaii permanently in June. » Ito will be responsible for developing and overseeing a risk assessment and management program for A&B. » Previously worked for Big Four accounting firm Deloitte & Touche LLP in San Francisco, where he was a senior manager in the accounting consultation and research group. » Replaces John Duncan, who left to join Hawaiian Telcom, the proposed successor to local phone company Verizon Hawaii.

By Tim Ruel
truel@starbulletin.com

Question: There's been some criticism that the new post-Enron corporate accounting requirements are too costly for public companies. What are your thoughts?

Answer: I've heard a lot of discussion on that concept. There was this big need for some reform and so this legislation was passed. Some would view it as pretty onerous in terms of impact on the company and cost of compliance. But I think in the end the benefits that arise from having to go through this process are important to the company.

There was kind of a similar thing that happened in the banking world. ... Over time, it's proven there are benefits, even thought here was this initial huge cost of compliance. Over time, it's proven to be beneficial. ... I'm hoping this will play out the same way.

Maybe initially a lot of companies are just seeing the cost of compliance and questioning whether there's a cost benefit there. I'm keeping my fingers crossed that over time things ... will justify the costs that have been expended.

Q: How much of an undertaking was it for A&B?

A: My understanding is that A&B was very proactive in starting the process very early. ... But even being proactive, I think there were significant resources that were used internally and externally. It was a significant effort of a lot of parties. I think the company did an excellent job. But it was a long journey getting from point A to point B over that time.

Q: How many people work in A&B's internal audit operations?

A: We have two staff members in Honolulu. I'm going to be moving there. And we have one staff member in Oakland, but I think we're looking for a couple more people in the near future in Oakland.

Q: Is this your first in-house accounting job?

A: After I graduated from UH, I actually worked for a property management company for about two years in the accounting department. My undergraduate degree was in finance and marketing. Then I worked two years in accounting. Then I decided accounting is the direction I should head.

Q: Why accounting?

A: When I was looking for a job, I tried an internship at Merrill Lynch. Then I worked for the property management firm. I think I did pretty well working with numbers, seeing something that I could do, and decided I should take this one step further in accounting and see where it leads. I think it was a good choice because in terms of broad exposure to different industries, I think public accounting gives you that broad exposure. You actually get to see inside different companies.

Q: Why A&B?

A: There were a couple of things. A&B is obviously a very well-known company. It's one of the best companies to work for in Hawaii. That, coupled with our desire to return back home, made it one of the attractive opportunities to take.

Also, I was interested in trying something a little bit different. It kind of worked out in terms of getting back to Hawaii. I actually did work a little on the A&B engagement when I was with Deloitte. So I had a little exposure to the company, its people and that helped me with the decision.

Q: Did your predecessor, John Duncan, finish getting the company compliant with the Sarbanes-Oxley requirements? Is there work left to do?

A: I think for a lot of people who approached Sarbanes, the first year was more of a shock. The company did get it done, but in terms of what needs to be done in the future, it's improving on the process and continuing the work that John had accomplished.

Basically his job (Duncan's) was to serve as an objective and independent function of the company to test management's assertion. Then the auditors come in and test that assertion. His job was to make sure we got through that process. So that was done and he left, but we still have to make sure ... that this is ingrained in our day-to-day activities. We have to be cognizant of internal controls. It never ends. It's a process more than a project.

One of the important things that we want to integrate into our Sarbanes process -- and this is a broader process -- it's an enterprise risk management process. Internal controls would be encompassed in that framework. It's an entity-level view to risk. The company has been dealing with risk but the plan is to make it more of a formalized process, just to make sure all risks are addressed appropriately. My job is to facilitate that process.

Q: Happy to be coming back here?

A: Yes. The people are great. The weather is great. I've got family there. We're very excited about moving back home and just being with family and friends.