Richmond plc operates a chain of department stores. The first store began operations in 1965, and the company has steadily grown to its present size of 44 stores. Two years ago, the board of directors of Richmond approved a large-scale remodelling of its stores to attract a more upmarket clientele. Before finalizing these plans, two stores were remodelled as a test. Linda Potter, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Potter discovered a sizeable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete, since reporting it would diminish the financial results and their bonuses.

Required

1. Would it be ethical for Potter not to report the inventory as obsolete?

2. Would it be easy for Potter to take the ethical action in this situation?