Oscars

PwC’s relationship with the Oscars is at risk over a mix-up on live TV. What can the accounting firm do to mend fences?

By Tina Irgang

An embarrassing envelope mix-up at this year’s Oscars ceremony has suddenly thrust PwC, normally a low-key participant in the awards, into the spotlight. What are the consequences of the accounting firm’s misstep, and how can it curtail the resulting damage to its reputation?

PwC has been the accounting firm to the Academy of Motion Picture Arts and Sciences — which gives out the Oscars — for 83 years, according to The Telegraph. Each year, PwC sends two employees to the Oscar ceremony, each of whom carries a secured briefcase that contains a set of envelopes listing each winner. The two employees remain backstage during the ceremony to hand the envelopes to presenters before they go on stage to announce their category.

During the ceremony on Feb. 26, actors Warren Beatty and Faye Dunaway, who were set to present the Best Picture category, were accidentally given the wrong envelope — the one listing Emma Stone as Best Actress for musical La La Land — by a PwC partner, Brian Cullinan, reports CNN. As a result, Dunaway announced La La Land as the Best Picture winner, when in reality, coming-of-age drama Moonlight had won the top honors. The producers of La La Land had come onto the stage and begun their thank-you speeches by the time the error was rectified.

Just a few moments prior to the mix-up, Cullinan had tweeted a backstage picture of Emma Stone, reports USA Today. This may have been what distracted him, and it was also a breach of protocol, the article goes on to say: “Cullinan was permitted to tweet up until he arrived to the red carpet — say, getting into the car with his secure briefcase. But once Cullinan was on site, he was asked to refrain from social media until the broadcast ended.”

How can PwC contain the fallout?

In a statement released Feb. 27, PwC took full responsibility for the incident, and named Cullinan as the culprit. “Once the error occurred, protocols for correcting it were not followed through quickly enough by Mr. Cullinan or his partner. … Last night, we failed the academy,” the statement reads, in part.

The Academy also issued a statement, saying: “We have spent last night and today investigating the circumstances, and will determine what actions are appropriate going forward.” (After this article was first published, the Academy announced that the two accountants involved, Cullinan and fellow PwC partner Martha Ruiz, would not be invited back for future ceremonies.)

The incident stung for the Academy especially because it was poised to honor Moonlight, a movie about a gay black man, only a year after controversy swirled around the lack of diversity among 2016 Oscar nominees, Variety notes.

For PwC, of course, the Oscar ceremony is a terrific piece of annual PR, broadcast around the world just in time for tax season. So what can the firm do to mend fences with the Academy? “If PwC is able to keep the Academy’s account, a big if, they will have to show that they are putting certain safeguards in place to prevent future mistakes,” Variety adds. “The accounting firm has two immediate issues that it must address. It has to make amends to its client, in this case the Academy, and it must work to revitalize its profile in the eyes of the wider public. Heading into the awards show, PwC ranked alongside professional service firms like [EY], KPMG and Deloitte as a symbol of a certain type of buttoned-up dependability. In the time it took for Dunaway to read out La La Land’s name, that image shifted dramatically.”

That shift in image may have consequences beyond just the lucrative Academy account. “As taxpayers look for a name they can trust to adeptly handle their IRS bills this April, an association with such a high-profile meltdown doesn’t look good,” says Mashable.

Of course, it’s not the first time PwC has been the subject of controversy. The accounting firm once paid a $225 million settlement to Tyco shareholders after it failed to spot massive fraud at the company, as Fortune notes. PwC also has gotten into trouble for “whitewashing” a Bank of Tokyo-Mitsubishi financial statement that implicated the bank in money laundering, the article goes on to say.

But as for the current controversy, “there’s little the firm can do to erase the incident from public memory beyond apologizing,” says Mashable. “As of Monday morning, the brand’s Twitter account was already resolutely plowing forward with unrelated company news to bury the now-embarrassing Oscar promotions.”

Clearly, PwC is trying hard to move on from the embarrassing incident. However, it’s questionable whether the Academy will want to keep reminding viewers of “Envelopegate” by promoting its association with the firm during each year’s telecast.

Tina Irgang is SmartCEO’s managing editor. Contact her at tina@smartceo.com.