Seventh Path Inc., our audit client, changed from a calendar year end to an off-year end to align with its parent company reporting period. EY is engaged to perform the stub period audit of the 5-month period ended 31 May 20X1. The business of the enity is somewhat seasonal, and the first five months of the year are usually less profitable than the rest of the year. The users of financial statements understand that the change in closing date is more of a technical exercise and therefore are not focusing on the results of the stub period. In prior period audits, EY used pretax income as basis for planning materiality (PM). How would you determine the PM for this stub period audit? We should annualize the results of operations for 5 months to determine PM, because PM is not expected to significantly change from period to period. We need to first consult with our Regional PPD, because this is an unusual audit scenario. We should use the planning materiality from the most recent annual audit, because PM should not significantly vary from period to period. We may use a capital-based measure, because the change in closing date is more of a technical exercise and users of financial statements are not focusing on the results of the stub period.