Only one thing is missing: large, publicly held audit clients. For 2004, Grant Thornton served as the independent auditor for just one Fortune 500 company, W.W. Grainger Inc. That's down from two during 2003, before Countrywide Financial Corp. switched to KPMG LLP, the smallest of the Big Four with $4.1 billion of revenue. Then, in March, Grant Thornton Chief Executive Officer Ed Nusbaum got the bad news. Grainger was switching to Ernst & Young LLP.

"There's this perception that somehow the Big Four are better than we are, and that's just simply not true," Mr. Nusbaum says. "It's a very difficult perception issue that has to be broken."

If ever the opportunity seemed ripe to shatter that image, it would be now. The corporate-accounting scandals of the past four years have damaged the Big Four's reputations, class-action lawyers are suing them over billions in shareholder losses, and criminal probes are pending over some of their tax-shelter sales.

Instead, even though Grant has tried its hardest with an elaborate marketing plan, the Big Four's grip on the audits of the world's largest companies keeps tightening. KPMG, Ernst, PricewaterhouseCoopers LLP and Deloitte & Touche LLP now audit all but about a dozen of the companies in the Fortune 500.

Many investors and corporate executives complain that the accounting industry has become too concentrated, leaving companies with too few choices for the important job of auditing. But the obstacles are many for Grant and other second-tier firms as they seek to move up.

First, there is size, a reason cited by Grainger and Countrywide in their moves: Grant's roughly 3,900 staffers stacked up against about 18,300 at KPMG last year. Then, too, the smaller firms aren't without their own warts: They face lawsuits over allegedly botched audits and some of their tax-shelter sales also are under federal scrutiny.

Most notably, Grant's former Italian arm, Grant Thornton SpA, made headlines in recent years as an auditor for dairy company Parmalat SpA, which filed for bankruptcy-court protection amid $18.5 billion in missing funds. Grant says it, too, was a victim of the fraud.

Professional investors also play a role. Cory Walker, chief financial officer of property-and-casualty insurer Brown & Brown Inc., says investors and analysts told him that, if he chose Grant, he'd have to "explain that decision," while a top-tier selection was a nonissue. Brown & Brown picked Deloitte & Touche.

Grant has been playing catchup almost since its start in Chicago in 1924, when 26-year-old accountant Alexander Grant left then-Ernst & Ernst with colleagues. His firm soon developed expertise investigating jewelry-store holdups and suspicious fires in gangland Chicago. More recently, the client list is heavy with closely held manufacturing, financial-service and technology companies.

By 1985 Grant had become the ninth largest U.S. accounting firm behind the Big Eight. As mergers shrank the group to six, Grant remained independent. In 2001, it stole a Big Five employee to help it win Big Five business: Ed Russ, whom Grant executives came to know as he researched a possible acquisition of Grant by his employer, PricewaterhouseCoopers.

His goal as Grant's chief marketing officer: raise corporate chieftains' awareness of Grant to 20 percent from 5 percent, where studies showed it stood. Launching Project Jumpstart, Grant flooded Big Five audit clients with letters, bulletins and cold calls, playing up the drawbacks of Big Five dominance, including less attention to clients.

Then came the collapse of Arthur Andersen LLP in 2002, following its conviction on a federal obstruction-of-justice charge tied to its audits of Enron Corp. The conviction, which the Supreme Court recently overturned, set off a scramble for Andersen's clients.

In the end, 87 percent went to the Big Four. Of the remainder, Grant was the biggest winner, with 45 additions. Among them was Global Crossing Ltd., a telecommunications company in bankruptcy court following its own accounting scandal. Grant partner John Desmond says Grant sent 12 partners to make the pitch at Global Crossing's office in Madison, N.J., outnumbering audit-committee members and management in the room.

Grant about this time also snared Audiovox Corp., an electronics company in the Standard & Poor's SmallCap 600 Index, from KPMG. Mr. Desmond had sought the account since 1990, cornering executives of the Hauppauge, N.Y., company in the buffet line and at golf outings of charity events. When Audiovox's chief financial officer spoke at Hofstra University, Mr. Desmond had sat attentively in the front row.

"We thought a smaller firm could better relate to our operations," says John Shalam, Audiovox's chief executive.

Meanwhile, the General Accounting Office in 2003 issued a roughly 150-page report on audit-industry consolidation citing the "the lack of viable alternatives in certain industries." Several months later, about 60 regulators, including some from the Securities and Exchange Commission, concluded that difficulties for big companies in changing auditors were mounting even as more options than ever were needed, thanks to new regulations restricting auditors from certain nonaudit work. "The collapse of another member of the Big Four" would create "a serious problem," they wrote in a report.

Still, Grant and its second-tier peers have found it hard to attract and retain big clients. Last year, Global Crossing dropped Grant, in favor of Ernst. According to Global Crossing filings, a new board of directors opted for a fresh start following the telecommunications company's exit from bankruptcy. Mr. Desmond of Grant says it wasn't because the firm "wasn't capable or was too small."

Rival BDO Seidman LLP, meanwhile, lost premier client Kmart Holding Corp., when the retailer acquired Sears, Roebuck & Co. to form Sears Holdings Corp., and went with Sears's auditor, Deloitte. "We have resource constraints just like the Big Four," says Jack Weisbaum, BDO's chief executive. A Sears spokesman declined to comment.

Among Grant's victories: its approximately 30 percent sales growth in 2004 far exceeded the Big Four's approximately 6 percent to 11 percent gain.

Now Grant is pushing the notion of "right sizing" - finding an auditor that fits a company's size. Its marketing campaign features ads with executives clasping a red rose in their mouths and the slogan, "A passion for the business of accounting." In April, Mr. Nusbaum briefed a House committee about the risks of auditor concentration and how Grant can be part of the solution. "The reality is that there are already more than four choices for most public companies," he said recently at the National Press Club, and then argued the case for Grant as an excellent fifth choice.

-- Diya Gullapalli (The Wall Street Journal)