In What promises to be only the opening salvo of a prolonged battle between the accounting profession and Congress, a Senate subcommittee today realeased a massive and critical study of the relationship between so called independent auditors, their corporate clients and the government.

The report calls for the imposition of broad federal regulations of the firms that audits the books of the ntion's publicly-owned corporations. Currently these firms are self-regulated.

"Independent auditors are endowed with a public reputation for impartiality and objectives because of the special role assigned to them by Congress," the report states. Their recommendations, supposedly reached independently, "are accorded great respect," the report says.

But the subcommittee concludes that auditors have become advocates of "the self-interests of their corporate clients" and therefore must be regulated.

The 1,760- page report and appendix titled "The Accounting Establisbment," was prepared by the subcommittee on reports, accounting and management of the Senate Committee on Government Operations. Much of the informtion came from a questionaire sent in December 1975 to the eight largest accounting firms, know as the Big Eight, by subccommittee chairman Lee Metcalf (D-Mont)

"The study was percipitated," said Metcalf in a cover letter to the report, "by continual revelations of previously unreported wrongdoing by major corporations as well as a series of corporate failures and financial difficulties that have come to light in recent years.

The role of independent auditors the report notes grew out of the securities laws passed in the 1960s . They required that certain information be reported by publicly-owned corporations and that the facts and figures be certified by independent auditors.

The Metcalf report concentrates on the "Big Eight" firms, which it says "are so big and influential . . . they dominate the practice of accounting in the U.S. and probably throughout the world."

According to the study, 85 per cent of the 2,641 corporation listed in the New York and American Stock Exchanges are clients of the Big Eight.

The Big Ehight firms are: Arthur Andersen & Co; Arthur Young & Co; Coopers & Lybrand; Ernst & Ernst; Haskins & Sells; peat MarwixkMitchell Co; Price Waterhouse & Co., and Touche Ross & Co.

The report's criticisms charge that: An Accounting firm will often serve different clients within the same industry, suggesting "a need for an investiagtion of possible anti-competitive effects.

Big Eight Firms have "seriously impaire their independence" by providing clients with such services as consulting and executive recruitment.

While "the most important requirement of independent auditors is that they be regarded by the public as truly independent," Big Eight firms "join recognized business lobbies and "advocate the partisan interests of their corporate clients on controversial issues, both for a fee andas "a public service."

Big Eight firms provides auditing accounting and management adisory services to federal, state and local government . . . (and) are able to influence governmental policies and procedures which may effect the business activities of their corporate clients."

The report specualtes on the profitability of accounting firms, which are generally partnership s and do not disclose their own balance sheets. The study estimates that Big Eight firms have total revenue of over $2 billion with net earnings of $95,152, the firm reported.

The federal government is contributing increasing amount to Big Eight revenues according to the report. For services in 1975, the firsm billed the government $16.5 million, more than twice as much as four years earlier.

The reports criticizes the accounting profession's self-policing organizations which it says, are totally dominated by various sponsoring groups that in turn are controlled by the Big Eight.

The Securities and Exchange Commission is described in the report as "the federal government's major participant in the accounting establishment."The commission decided soon after its creation in 1934 the report says, "not to ex ercise its authority to set accounting standards." The SEC had allowed the accountants to set their own standards, which the subcommittee staff found unsatisfactory.

Among the recommendations of the report is that the federal government take over the responsibility for establishingauditing standards.