What Does an Accounting Firm Do for the Oscars?

Accountants don't usually come to mind when we think about the Academy Awards. But a member of the Big Four has played a starring role in the world's most prestigious film award ceremony since 1935. And Bette Davis is a key reason why.

In 1935, Davis failed to receive a nomination for her role in Of Human Bondage. That caused a media uproar. Davis was eventually nominated after a write-in campaign, but she was denied the award.

"Syndicated columnists spread the word 'foul' and the public stood behind me like an army," Davis wrote in her autobiography about the backlash against the Academy of Motion Picture Arts and Sciences.

That same year, the Academy also saw accusations of fraudulent tabulating, according to biographer A. Scott Berg. So it hired the London-based accounting firm Price Waterhouse to count votes, ensure the secrecy of the results, and "stem the tide of unfavorable industry sentiment."

It's been a long and briefly bumpy relationship since then.

Accountants at the Academy Awards

On awards night, three PricewaterhouseCoopers partners (Price Waterhouse merged with Coopers & Lybrand in 1998 ) know which names will be called before anyone else in the world.

The votes, including printed electronically submitted ones, are hand-counted and verified by the PricewaterhouseCoopers (PwC) Oscars team at a secret, secure location, a process which the company says takes approximately 1700 work-hours. Winner cards are designed and printed with every nominee's name. Two complete sets of the famous envelopes are stuffed, sealed, and placed in locked briefcases once the tabulation process is complete. Three members of the PwC team, who rely on colleagues to help with counting but are the only ones with knowledge of the final tally, memorize the results as well. On the night of the awards, they walk the red carpet and take their respective positions backstage and in the control room with producers.

All About the Secret Envelopes

This confidential envelope system was introduced in 1941 after The Los Angeles Times broke a news embargo in 1940 and published the results in the evening edition before the ceremony.

PwC and its system came under scrutiny again in 2017 after La La Land was incorrectly announced as the winner of Best Picture at the 89th Academy Awards. PwC partner Brian Cullinan had given presenters Warren Beatty and Faye Dunaway the wrong envelope. The Academy rehired PwC, however, saying new protocols were established, including "a greater oversight role for PwC US Chair and Senior Partner."

PwC Enjoys Oscars Clout

Besides doing the glamorous job of mingling with the stars and counting ballots, PwC prepares and audits the Academy's financial statements and does its taxes. Variety reports that the firm also oversees the Academy's elections.

The firm charged the non-profit organization $222,051 in 2016, according to the Academy's tax returns. That's a modest fee given the number of hours PwC says it puts into the job.

So why does a global accounting giant that serves 200,000 clients, including 86% of Fortune Global 500 companies, and that has global annual revenue exceeding $40 billion work for the Oscars?

While PwC was brought in all those years ago to help the Academy's reputation, today it enjoys phenomenal exposure and publicity from being the trusted partner of a high-profile client like the Academy. Confidentiality, accuracy, and integrity, which the company says it employs in the balloting process, are also important to clients of accounting firms around the world.

After PwC handed the wrong envelope to Warren Beatty in 2017, analysts speculated about what this would mean for the company's reputation. PwC had been involved in several more serious controversies before. And even a simple human error at the Oscars is as public an embarrassment can get.

But after putting in place new rules, the company is still crunching numbers and filling envelopes for the Academy. And at next year's Oscars, PwC will have a share of the spotlight.