Richmond, Inc. operates 44 shopping malls. Two years ago, the Richmond Board of Directors decided to renovate the store to attract more top-class customers.

Before implementing these plans, Linda Pearlman, assistant financial manager, was asked to oversee financial reporting for the pilot shop, and it was known that she and other executives receive bonuses from the company's sales growth and profitability.

As she filled in the financial report, she discovers that there are inventory items that have been out of fashion, and that these items should be discounted for sale or returned to the manufacturer. She consulted this situation with her management colleagues, who agreed that it was a good idea not to list these products as obsolete items. If they do, they will have a negative impact on their financial performance and certainly affect their bonuses.

Do you think that what Pearlman would do without reporting the product as a falling product? Are there ethical issues in accounting? What should she do?