In the aftermath of the Oscars envelope mix-up, the president of the Academy of Motion Picture Arts and Sciences (AMPAS) announced that was re-evaluating its long-running relationship with PwC. AMPAS and its affiliates is a not-for-profit organization.
PwC, which was hired by the AMPAS in 1934, is the Acadamy’s financial statement auditor and provides tax services as well the services related to the Oscar balloting process.
The AMPAS reported in its tax return that the total cost of its accounting services was $145 000.

Smaller organizations like the Hollywood Foreign Press Association, which produces the Golden Globes, pay more for their tax return preparation alone. Further, according to a Los Angeles area professional accountant who specializes in not-for-profits, the 1 700 hours that PwC stated it spent in the ballot process would cost more than $500 000.
Some commentators wonder if the AMPAS and PwC relationship is perhaps too cozy. In addition to the length of the relationship, the CFO, who joined the Academy in
2001, previously worked for PwC and his wife is a partner at PwC.
Source: Francine McKenna, “Why Oscars may not fire PwC, even as Academy president says two partners now banned,” Market-Watch, March 1, 2017, accessed on June 9, 2017 at http://www.
marketwatch.com/story/the-reasons-pwc-may-keep-its-lock-onthe-oscars-audit-2017-02-28.

REQUIRED
a. Prepare an independence analysis of the relationship between AMPAS and PwC. Do you think that threats to PwC’s independence are such that it affects the conduct of the audit?
b. Did PwC violate any rules of professional conduct? If so, identify which rules and explain.