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#Envelopegate Redux: PwC Failed to Predict the Worst-Case Scenario

Last month we noted that PwC had gone far out of its way to not talk about its role at the Academy Awards after last year’s colossal screw-up with the Best Picture envelope.

That doesn’t prevent the rest of the entertainment and accounting media (well, maybe just us) from talking about it, however. You can read about all the changes the firm has made to avoid a sequel in Michael Rapoport’s story at The Wall Street Journal, but for my money, the blow-by-blow account written by Scott Feinberg at The Hollywood Reporter delivers the behind-the-scenes goods and laughs that you’ll want to prepare for this weekend’s Oscars.

As you might expect, PwC doesn’t come out looking too good. From the beginning, the firm wanted to be in the spotlight. PwC partner and chief #envelopegate culprit Brian Cullinan had done a skit with Neil Patrick Harris in 2015 and it seems he wanted to do another cameo. Oscars producer Jennifer Todd said she “had several exchanges with PwC about them wanting to know how much we could feature them during the broadcast.”

Also, Cullinan had been instructed by the Academy’s corporate communications department not to “do any social media backstage.”

How’s that for foreshadowing.

For the uninitiated, what resulted was Cullinan handing the wrong envelope to Warren Beatty, probably because he was distracted backstage with tweeting. When Beatty and his co-presenter, Faye Dunaway, opened the envelope to read the winner, a fiasco began to unfold which would result in PwC having the starring role in a story that will undoubtedly be part of Hollywood lore for decades to come.

But back to the details — unfortunately, Cullinan and his fellow partner and co-balloting leader, Martha Ruiz, were like deer in headlights when La La Land was announced as the Best Picture winner instead of Moonlight:

PwC’s balloting leaders are required to memorize the winners and spring into action if a wrong name is announced. Cullinan quietly tells a stage manager, John Esposito, that he thinks the wrong winner has been announced, but does nothing further. Esposito then shares this information over his headset, prompting head stage manager Gary Natoli, crouched beside [Jimmy] Kimmel, to instruct another stage manager to have PwC’s Ruiz (who has not reacted to the incorrect announcement) open the second best picture envelope and confirm which film won.

Neither Cullinan nor Ruiz would go onstage to correct the error, and in the meantime, La La Land‘s producers had made their way to the stage and started making speeches. If you didn’t watch the show last year, or any of the post-snafu coverage, the chaos that erupts on stage and in the theater is something to behold:

Jennifer Todd summed up the situation pretty well as it relates to PwC:

It was disappointing that the accountants froze and didn’t do any of the protocols, but I’m not surprised. Gary [Natoli] was more equipped to deal with the problem.

Of course, this was just the beginning. After the broadcast ends, everyone is trying to figure out what had happened. Once again, Todd has all the right words:

I didn’t realize I was going to be talking about Brian from PwC for the rest of my life.

However, it was the other Oscars producer, Michael De Luca, who hit on the most serious mistake that PwC made:

We didn’t, in our wildest dreams, think we had to have a conversation about what if the worst thing that could ever happen, happens. I think they said the same thing about the Titanic and icebergs: “It’s never gonna happen, don’t worry about it.”

When I wrote about PwC’s failure to envision the worst possible outcome a day after the debacle, I was reacting to Cullinan’s own words from a prior interview where he expressed uncertainty about what he would do in the event of a wrong winner being announced because it was “so unlikely”:

On paper, because PwC didn’t think that a mistake of this magnitude could happen, they also didn’t think of what it would actually be like if it did happen. In their minds, the wrong winner for Best Makeup gets read, Cullinan or Ruiz dash out there to stop things and the next day the media has a little bit of a chuckle about it. Never in their wildest dreams did they think it would happen this way or that it would result in pandemonium.

The plan of, “I guess we’ll stop a live broadcast that millions of people are watching,” is a bad plan at best and not a plan at all at worst. And this is probably the biggest mistake PwC made: They failed to plan for the unpredictable and the worst — and I mean WORST — case scenario.

Now that PwC has experienced the worst possible outcome, it’ll probably be another 90 years before we see another mistake of this magnitude at the Oscars. Now if the firm could only apply this life lesson to its auditing practice, we’d really be making progress.