PricewaterhouseCoopers has taken full blame for the Oscars mix-up that has since been dubbed “Envelopegate” – ultimately putting the accounting firm’s 83-year partnership with the Academy of Motion Picture Arts and Sciences in jeopardy.
A source close to the production of the 2017 Oscars tells PEOPLE that the fallout has already begun, explaining, “The Academy has launched a full-scale review of its relationship with PwC but it is very complicated.”
“It is too early to say how this will play out but everyone is of course taking it very, very seriously,” the insider adds.
The miscalling of the Best Picture winner – caused by PwC Oscars co-leader Brian Cullinan handing presenter Warren Beatty the wrong envelope – is the first major mistake of its kind to be made during the annual ceremony in decades.
PwC blamed Cullinan and colleague Martha Ruiz for a slow reaction time once the mistake had been made, saying in a statement, “Last night we failed the Academy.”
Academy President Cheryl Boone Isaacs told The New Yorker she reacted in “horror” at the mishap. In a formal statement, the Academy further said, “For the last 83 years, the Academy has entrusted PwC to handle the critical tabulation process, including the accurate delivery of results. PwC has taken full responsibility for the breaches of established protocols that took place during the ceremony.”
“We have spent last night and today investigating the circumstances, and will determine what actions are appropriate going forward. We are unwaveringly committed to upholding the integrity of the Oscars and the Academy of Motion Picture Arts and Sciences,” it concluded.
According to The New York Times, PwC is a privately held company and monetary details of its exact agreement with the Oscars have not been publicly disclosed. In total, PwC reported sales of $36 billion during its last fiscal year, reported the Times, although the firm’s entertainment and media group accounted for just 4.2 percent of total sales.
The voting tabulation process for other major awards shows are handled by varying firms: this year, Ernst & Young was in charge of the Golden Globes results, and Integrity Voting Systems handled the Screen Actors Guild Awards balloting.
Since the Academy Awards’ early years, PwC has handled the ballot tabulation for both the Oscars nomination process and the winners selection process, the accounting firm explained in a press release from 2009.
First, PwC Oscars balloting leaders collect the handwritten ballots, and then – with a team working from an undisclosed location – they hand-tally the results of the 24 major categories and stuff the winners envelopes – two of each for every award. The entire process takes around three days – much shorter than the protocol for initial nominations.
All the envelopes are placed in a briefcase, which the balloting leaders – this year, Ruiz and Cullinan – carry to the Oscars. Both are accompanied by off-duty police officers, and take different cars and routes to the ceremony. In case of a mishap, both leaders have the full list of winners completely memorized.
According to the PwC release, getting picked as a balloting leader is an honor bestowed upon only a few. Dan Lyle, who was balloting leader from 1986 to 1996, said, “It was one of the most exciting jobs PwC had to offer. There’s a huge sense of responsibility that goes along with the job. You’re involved with something that helped make PwC a household name.”
Ahead of the ceremony, Cullinan – who has held the role since 2014 – seemed assured that no mistake could be made during the show. He told The Huffington Post that if a wrong winner were to be called, “We would make sure that the correct person was known very quickly. Whether that entails stopping the show, us walking onstage, us signaling to the stage manager — that’s really a game-time decision, if something like that were to happen.”
He added, “Again, it’s so unlikely.”
Tim Ryan, U.S. chairman and senior partner at PwC, told Variety that he has spoken at length with Cullinan about the incident, noting, “He feels very, very terrible and horrible. He is very upset about this mistake. And it is also my mistake, our mistake, and we all feel very bad.”