Who is OpenAI’s auditor?

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OpenAI is committed to spending about $1.4 trillion on data centres over the next decade or so.

It accounts for about two-thirds of unfulfilled contracts at Oracle, which is valued at about $630bn, and two-fifths of unfulfilled contracts at CoreWeave, which is valued around $36bn. It has around $375bn of unfulfilled contracts with Microsoft, the world’s third-most-valuable company.

Its latest funding round implies OpenAI has a market cap of about $500bn, which would make it a top-twenty S&P 500 company. Recent reporting by Reuters suggests the company may aim to IPO at a valuation of about $1 trillion in the coming years.

It is at the centre of an extraordinarily-complicated mesh of financial agreements, justifying diagrams like this one published by Morgan Stanley last month (which will have only become more complicated now Amazon is involved):

Who is its auditor?

It’s a simple question, which ought to have a simple answer.

Alphaville had been looking at this for the past few days, and then Michael Burry just… he tweeted it out:

So, in the finest blogging tradition, let’s just dump what we currently know on the internet.

Most public companies in OpenAI’s notional market cap weight class are audited by one of the Big Four: Deloitte, EY, KPMG or PwC. At the lower end of large-cap US stocks, names like Grant Thornton or BDO creep in.

OpenAI’s auditor is not disclosed. Now, as a private company, it is under no obligation to release this information — but it’s not trivial. The lack of information has left several people we’ve spoken to on Wall Street a bit confused.

In the past, OpenAI’s non-profit status has majorly limited its need to release such financial information. On its latest Form 990 return, used to disclose returns for such companies, Fontanello, Duffield, & Otake, a small San Francisco-based accountancy firm, is listed as the paid preparer — that would appear to be an accountant, rather than an auditor. Here is that firm’s entire website:

The form says, oddly, that an independent accountant was not used to compile the financial statements, but that an independent accountant did audit the statements (zoomable version):

So OpenAI has at some point had an auditor, which is nice.

Alphaville was left mildly confused about Fontanello, Duffield, & Otake’s role, so we called them on Monday afternoon in case they could offer any help. We were told nobody was around who could take our questions. We left our number, but have not heard back at pixel time. We’ll update if we get a response.

Next, we asked OpenAI. They declined to comment, but a person close to the organisation told us it has “an industry standard audit with one of the Big Four firms”.

Which might it be? Looking at the companies it has its closest relationship offers a starting point: Microsoft is Deloitte, Nvidia is PwC, and Oracle is EY. Arguably that leaves KPMG as the least conflicted, although given how much concentration there is among the four it would seem impossible to avoid any conflicts, so these types of overlapping relationships are not generally seen as an issue.

A more problematic relationship would be if OpenAI was being audited by a firm that is also selling OpenAI products to its clients.

Here is a clearer clue. EY and KPMG both sell products that employ Microsoft Azure OpenAI tools (for strategic intelligence and assurance respectively), while PwC earlier this year became OpenAI’s “first resale partner and largest enterprise user”, selling ChatGPT as a complement to their audit and tax services. Deloitte, meanwhile, is definitely using OpenAI internally, but does not seem to be selling it. Instead, it has a business partnership with Anthropic.

We have contacted all of the Big Four for comment. KPMG declined to comment. The others, as of pixel time, have stayed silent.

If you happen to work for one of them and know more, please do reach out.

Further reading:
— How high are OpenAI’s compute costs? Possibly a lot higher than we thought
— OpenAI shunned advisers on $1.5tn of deals (MainFT)