How Oscar Best Picture Shock Left A-List 'Vanity Fair' Party Crowd Yelling 'This Is Crazy!'

"People were stunned," a source tells PEOPLE of the Vanity Fair party's reaction to Envelopegate

While millions of viewers around the world reacted with shock at the 2017 Academy Awards’ Best Picture disaster, a star-studded group tuning in from the Oscars’ host city were similarly astonished by the moment.

“People were stunned!” an insider at the annual Vanity Fair Oscars party reveals of the gathered A-list partygoers, who were watching the mistake play out onscreen while enjoying the festivities held between the Wallis Annenberg Center for the Performing Arts and the Beverly Hills City Hall.

Katie Couric, Amanda Peet and Allison Williams were in a group watching the show outside, and cheered when La La Land won, the source tells PEOPLE.

The celebratory moment was short lived – someone interrupted the gabbing crowd, announcing, “Wait, wait,” as producers took the stage and revealed the mistake live. All eyes tuned to the screen, and everyone started yelling “This is crazy!”

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Yet, with the ceremony’s end came focus on other endeavors: namely, a night of drinking, dining and dancing. Best Supporting Actress winner Viola Davis changed into a white pantsuit and gold platform sneakers for the Vanity Fair after party, where she was greeted with cheers and congratulations when she arrived with her statuette. “It was like Queen Viola is here,” says a source.

PricewaterhouseCoopers, the accounting firm that counts and delivers the winning Oscar envelopes, has since publicly taken the blame for the incident in which La La Land was mistakenly called as the Best Picture winner over true victor, Moonlight.

The firm said in a statement, “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.”

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