The Meaning of The Academy Awards Faux Pas

6/24/2019 - Monocle Journal

At the precise moment when Warren Beatty and Faye Dunaway were about to announce the winner for Best Picture at the 89th Oscars ceremony this year, two PwC representatives were experiencing probably the worst moment of their lives. Literally seconds before the winner was incorrectly announced as La La Land rather than Moonlight, the actual winner, it dawned on the two auditing firm representatives – Martha Ruiz and Brian Cullinan – that they had handed over the wrong envelope to the presenters, backstage.

In the excitement, they had mistakenly handed over the envelope for Best Actress, won by Emma Stone for her role in La La Land, rather than the envelope for Best Motion Picture. One can only imagine the Hobson’s choice that they each faced at that precise moment: either come hurtling out from backstage screaming “Don’t open it!”, or quietly slip out the back door, hoping it was all a bad dream. Of course, neither Martha Ruiz, nor Brian Cullinan did either of these things; they simply watched as the mistake was made, sent a message immediately to correct it, and apologised afterwards, along with PwC, their firm.

To be fair, anyone at any point in time, could have made such a mistake. Their job had been to count the six thousand votes that had been cast by members of the Academy of Motion Picture Arts and Sciences, then to memorise the winners for each category – as has become the custom to ensure secrecy – and then to finally write down the winners’ names and pass the appropriate envelope to the presenters for each respective category through the course of the evening.

For the past 83 years PwC has been responsible to do just this, the audit firm being a long-time partner of the Academy Awards. Of course, there is not a single person of importance who would wish anything but empathy to be the response to this error, and it would be malicious to suggest any sanction whatsoever against PwC for the error. It is simply one of those things; it is a mistake, and we all make them.

What it does highlight, however, is a particularly salient point: Fortune magazine, in reporting the Academy Awards incident, described PwC as “one of the Big Four accounting firms (alongside KPMG, Deloitte, and Ernst & Young), which help audit company balance sheets and plan their taxes”. In their article covering the Awards debacle, they seem not to see the irony at all in having PwC consultants performing relatively menial tasks on behalf of the Academy. Irrespective of the fact that the tasks were incorrectly executed – no doubt through simple human error – Fortune magazine, along with just about everyone else, simply accepts and takes it for granted that audit firms are ideal firms to depend on for a raft of quite diverse tasks, any task whatsoever in fact, simply because they are audit firms.

Whether that task be tabulating votes and memorising the winners, or whether it be the provision of essential financial accounting skills through contracting services, or whether it be conducting forensic investigations, or whether it be writing reports about fictitious rogue units within state-owned entities, it is simply assumed, by virtue of the audit brand, that the audit firm will be up to the task.

Since audit firms should, by definition, be considered beyond reproach – they are, after all, the ones marking everyone else’s homework – it is only natural to rely on them for other jobs as well, not just the job for which they have been trained. Without knowing them personally, it can be stated with some certainty that Martha Ruiz and Brian Cullinan, as skilled as they may be as auditors, were never specifically trained to handle the pressure of their Academy Awards moment, nor for that matter to memorise a range of cinematic features and their starlets.

The original idea of audit was for there to exist an industry on which all industry could depend to audit firms’ financials, and to provide tax advice as Fortune magazine so succinctly puts it. If only it were so simple. There is no doubt that the authoring of the SARS report is reprehensible. The Academy Awards faux pas was just a simple mistake, but at the very least it highlights the point: there is no specific reason that we should believe that auditors are infallible. They are from the same planet that we are from, where mistakes can be made, and where fraud and corruption can exist within our most-revered firms. At their best, they are essential to our economy, and at their worst, they can be party to the erosion of our democracy.


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