Will the Oscars Fiasco Harm PwC’s Reputation?

Many viewers of Sunday night’s Academy Awards telecast wondered if some elaborate prank was unfolding onstage during the presentation of the Best Picture award, when the trophy was first presented to “La La Land,” only to be withdrawn and then awarded to “Moonlight” instead.

The scene was surreal at the end of the three-hour-plus awards show, as “Bonnie and Clyde” co-stars Warren Beatty and Faye Dunaway strode onstage to present the final award while marking the 50th anniversary of their own film. As Beatty opened the envelope, he stared in confusion at the card and looked over at Dunaway quizzically. “You’re impossible. Come on,” she told him, and then she announced the winner was “La La Land.”

The producers walked onstage and began to give their acceptance speeches, but then an accountant from PricewaterhouseCoopers and some stagehands ran onstage to tell them it was the wrong winner. “La La Land” producer Jordan Horowitz looked at the card they gave him, stating “Moonlight” was the real winner. “Guys, guys, I’m sorry, no, there was a mistake,” he admitted, holding up the right card for the cameras. “Moonlight, you guys won Best Picture. This is not a joke.”

Oscars host Jimmy Kimmel saw the humor in the situation. “I think you guys should keep it anyway,” he told the “La La Land” producers. “Guys, this is very unfortunate what happened. Personally, I blame Steve Harvey for this,” he added, poking fun at the host of the 2015 Miss Universe contest who mistakenly crowned the wrong winner.

Kimmel then turned to Beatty. “Warren, what did you do?” he asked.

“I want to tell you what happened,” said Beatty. “I opened the envelope and it said, ‘Emma Stone, La La Land.’ That’s why I took such a long look at Faye, and at you. I wasn’t trying to be funny.”

Only a few minutes before the Best Picture award, Stone had received the Best Actress award for her performance in “La La Land.” Apparently a duplicate of the card in her envelope had been given to Beatty by mistake. Stone later said she was still holding the card announcing her award, so it wasn’t the exact same one given to Beatty.

The exact details are still unclear, but in the wee hours of the morning, PwC sent out a tweet acknowledging the error (see PwC apologizes for Oscars fiasco). “We sincerely apologize to Moonlight, La La Land, Warren Beatty, Faye Dunaway, and Oscar viewers for the error that was made during the award announcement for Best Picture. The presenters had mistakenly been given the wrong category envelope and when discovered, was immediately corrected. We are currently investigating how this could have happened and deeply regret that this occurred. We appreciate the grace with which the nominees, the Academy, ABC, and Jimmy Kimmel handled the situation.”

PwC chairman Tim Ryan later told USA Today that one of the partners standing on one side of the stage had handed the wrong envelope to Beatty.

PricewaterhouseCoopers and its predecessor firm Price Waterhouse have handled the counting of the Oscar ballots for 83 years, and the annual Academy Awards have long served as a point of pride and publicity for the Big Four firm. The sight of the Price Waterhouse accountants walking onstage carrying a padlocked briefcase, sometimes handcuffed to their wrists, containing the names of the Oscar winners has long been a traditional feature of each telecast, even if it has been shortened in recent years to little more than a footnote in the proceedings. But this year, after the Best Picture fiasco, PwC could find its hold on the Oscar ballots facing some challenges. Some of its Big Four competitors, particularly Ernst & Young, have been making inroads in counting the ballots for other awards shows such as the Golden Globes and the Emmys.

The high-profile snafu could damage PwC’s association with the Oscars and make it vulnerable next year to a competitor, unless it manages to find someone outside the accounting firm behind the mix-up. The Academy of Motion Picture Arts and Sciences made dramatic changes last year in the composition of eligible voters and its own board of governors to encourage more diversity after stinging criticism of the lack of minority actor and actress nominees at the last few awards. The strong group of Oscar-nominated performances by black actors and actresses made this year’s awards much more diverse than last year’s ceremony. The Academy seems to be in change mode now, and that could perhaps lead to a change in its accounting firm next year.

The controversy in some ways mirrors the pressure on public companies a few years ago to change their longtime auditing firms as the Public Company Accounting Oversight Board in the U.S. and the European Commission in the European Union mulled requirements for mandatory audit firm rotation. Congress essentially decided the matter for the PCAOB by passing a bill overwhelmingly in the House in 2013 prohibiting mandatory audit firm rotation (see House Approves Bill Banning Mandatory Audit Firm Rotation). The European Parliament, however, did pass legislation requiring mandatory retendering, in which audit firm work is put out for bid, and mandatory rotation (see European Parliament Committee Votes for Audit Firm Rotation). The Academy of Motion Picture Arts and Sciences may decide to follow suit.

Do you think the Academy should change its accounting firm after 83 years?

Michael Cohn is editor-in-chief of AccountingToday.com.