You are auditing the Azealia Company, a private company. The preliminary planning materiality (PM) has been calculated at MU 1.5 million based on 5% of pretax income. From reviewing the Income Statement analysis in the General Ledger Analyzer, you identified a write-off MU 4 million of bad debts in the current year. From inquiry of management, you learned these bad debts related to two major customers that filed for bankruptcy during the year. Customer bankruptcy occurs infrequently. The Azealia Company did not record any provision for doubtful accounts related to these amounts in the prior years. Now, you are reassessing the materiality thresholds. What impact does this information about the bad debt write-off have on determining your PM? PM may be increased by MU 200 thousand as the basis of materiality should be adjusted for significant one-off non-recurring event by adding back the bad debt write-off. PM will still be set at MU 1.5 million because the write-off transaction is considered nonrecurring in nature. Regional PPD should be consulted to determine the appropriate PM. The audit team may switch to another earnings-based measure, such as gross margin, where the effect of provisions (write-off) is not yet considered.