Sadrina Real Estate Development Company prospered during the lengthy economic expansion of the 1980s. Business' was so good that the company bothered with few internal controls. The early 1990 s' decline in the local real estate market, however, has caused Sadrina to experience a shortage of cash. Diane Sadrina, the company owner, is looking for ways to save money.

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As controller of the company, write a memorandum to convince Sadrina of the company's need for a system of internal control. Be specific in telling her how an internal control system could lead to saving money. Include the definition of internal control, and briefly discuss each characteristic, beginning with competent, reliable, and ethical personnel.