According to PricewaterhouseCoopers (PwC), accountant Brian Cullinan who media reports said had been tweeting backstage shortly before, gave presenters Warren Beatty and Faye Dunaway the wrong envelope for the award.
The accounting firm said in a statement, "Cullinan mistakenly handed the back-up envelope for Actress in a Leading Role instead of the envelope for Best Picture".
"Once the error occurred, protocols for correcting it were not followed through quickly enough by Mr. Cullinan or his partner."
Additionally The Wall Street Journal and celebrity news website TMZ.COM reported that minutes before the mix-up Cullinan had posted a backstage photo of Emma Stone on Twitter, which was later deleted.
The mistake was not recognised or corrected until the cast and producers of La La Land were on stage giving their acceptance speeches. Eventually, the producer, Jordan Horowitz put things right.
"Guys, guys, I'm sorry. No. There's a mistake," Horowitz said. "'Moonlight,' you guys won best picture. This is not a joke."
Moreover, it was not till three hours later that PwC, which has been supervising the Academy Awards balloting for 83 years, initially to confirm that Beatty and Dunaway were presented with the wrong category envelope to begin with.
PwC said it took full responsibility and regretted to the casts and crews of both the movies, La La Land and Moonlight.
"We sincerely apologise to Warren Beatty, Faye Dunaway, (host) Jimmy Kimmel, (broadcaster) ABC, and the Academy, none of whom was at fault for last night's errors," read the statement.
The Academy of Motion Picture Arts and Sciences that also organises the Oscars apologised for the mishap and said it was committed to upholding the integrity of the Oscars.
"We have spent last night and today investigating the circumstances, and will determine what actions are appropriate going forward," it said in a statement.
"Except for the end, it was fun," Jimmy Kimmel said on Monday, referring to the Oscar show he hosted.
"You know it’s a strange night when the word ‘envelope’ is trending on Twitter," he said on his ABC show "Jimmy Kimmel Live."
"This is not advanced math. PwC had to get the right name in the right envelope and get it to the right person," said Tim Calkins, a marketing professor at Northwestern University, calling the error a "bit of a branding tragedy."
According to the PwC procedure, only two accountants know the names of the 24 winners after their names are put in two sets of sealed envelopes. The two accountants also memorise the winner names.
According to tradition, the envelopes are taken separately in two briefcases to the venue itself. The two accountants in this case Cullinan and Martha Ruiz are driven there separately as well to avoid any mishaps.
The two then stand off stage at opposite ends and hand the envelopes to the respective presenters as each category is announced. However, according to Huffington Post, Cullinan said the procedure for dealing with the hand-off of an incorrect envelope, other than signaling to a stage manager was unclear.
Cullinan added, "It's so unlikely".
The Moonlight filmmakers were very gracious about the error.