Grant Thornton has been pressing the UK accounting regulator to restore it to the top tier of audit firms, subject to the greatest regulatory scrutiny, as it attempts to repair its reputation and reverse a years-long retreat from the high-risk work.The UK’s sixth-largest accounting firm dropped more than 70 per cent of its top audit clients between 2016 and 2022 as it reeled from millions of sterling in fines and legal cases over shortcomings in its work, including at collapsed cafe chain Patisserie Valerie, retailer Sports Direct and outsourcer Interserve.Grant Thornton was relegated in 2023 from the “tier one” group of firms most closely scrutinised by the Financial Reporting Council as it culled its portfolio of “public interest entity” (PIE) clients – a category that includes large listed companies and financial institutions – to just 20 the previous year.The change of tier meant Grant Thornton was no longer subject to the regulator’s most intensive oversight or included in its annual report on individual firms’ results in quality inspections.Audits of PIEs attract greater regulatory scrutiny. Breaches of audit standards in work for PIEs also attract more severe punishment, with fines running to millions of sterling in recent years as the FRC clamped down after auditors failed to raise red flags before several high-profile company failures.Despite the reduced scrutiny, the demotion became a handicap for Grant Thornton when competing for large audit mandates, according to people familiar with the matter, because prospective clients mistakenly interpreted it as a sign that the regulator viewed the firm as a less capable audit provider.“Being placed outside the FRC’s top tier was, in practice, misread by some prospective clients as a league table position rather than a supervisory classification, which did create confusion in the market,” said Wendy Russell, UK head of audit at Grant Thornton.Grant Thornton, which has been fined more than £4 million (€4.7 million) since 2021, repeatedly asked the FRC to restore its tier one status, or to publish a standalone annual audit quality report covering the firm, according to a person familiar with the discussions.Tier-one status is viewed as important for large clients for the perceived layer of security it provides during audits: Frasers Group has been seeking a Big Four auditor after being audited by mid-tier firms for years.Grant Thornton, which sold a stake to private equity group Cinven in 2024, has begun rebuilding its audit practice’s roster of PIE clients.The firm had set a target of annual fee income growth of more than 10 per cent for the PIE audit practice and identified more than 120 audit tenders they wanted to pursue, said Grant Thornton. The firm has won new mandates from companies including Raspberry Pi and SSP Group.However, the watchdog has since reviewed its tiering system and is expected no longer to place firms into formal tiers in its public reporting. Its annual audit quality report this year is instead set to cover a broader range of firms.Sarah Rapson, the FRC’s former executive director of supervision, said last year that the tier system had “become a bit of a league table externally” and had affected some firms’ “ability to compete”. The market for large audits is dominated by the Big Four – Deloitte, EY, KPMG and PwC – and the lack of other firms with the resources to carry out the work is a long-standing concern for companies and policymakers.Worries about market concentration intensified after many firms, including Grant Thornton, offloaded higher-risk audits in the wake of several corporate failures, including at outsourcer Carillion, and the tougher regulatory scrutiny prompted.Russell said that having challenger firms was “vital” for the audit market and she was “proud” of the recent growth of Grant Thornton’s PIE business. “Our strategy has not been about chasing volume; instead, our focus is taking on clients that fit with our purpose and strategy.” – Copyright The Financial Times Limited 2026