pretax and after-tax earnings

1. The total effect on pretax and after-tax earnings of the understatement of purchases.
2. The total effect on pretax and after-tax earnings of the rescinding of the bonuses.
3. An estimate of the percentage of after-tax earnings management is receiving in bonuses.
4. A discussion of why Micro Warehouse’s board of directors may have decided to tie managers’ compensation to reported earnings and the possible relation between this type of bonus scheme and the accounting errors.