Lobbyists beware: You have some new competition in town.

In the past few years, accounting firms have expanded beyond K Street to Capitol Hill. Seeking new challenges as their traditional auditing business slows and bolstered by newly hired legions of eager tax experts, firms once thought of merely as bean counters now have extensive contacts in Congress and long lists of new clients.

Accounting firms have entered such areas as advising clients who seek congressional relief, monitoring the progress of tax legislation, estimating the effect on federal revenue of changes in the tax code and even down-and-dirty lobbying.

In the process, they are reaping some of the big bucks that once flowed only to the Gucci-shoed lobbying crowd -- and facing ethical dilemmas about how far they can go as advocates while retaining the independent identity of auditors.

"All of us are grappling with the question of what we should be doing," said Gillian Spooner, a partner in Touche Ross and a former staffer on the congressional Joint Committee on Taxation. "I personally feel we are doing a disservice to our clients if we are not helping them in this area."

Accounting firms were ubiquitous on Capitol Hill during the last months of 1987, as Congress debated and approved the $9 billion tax increase bill. They provided tax-revenue estimates, spied on the tax-drafting process unfolding behind closed doors, offered advice for clients and lobbied for amendments. Accountants also worked on numerous issues during congressional consideration of the Tax Reform Act of 1986.

Some firms are more active than others. A majority has avoided personal lobbying, preferring to stay on the sidelines and let their clients make the face-to-face contacts. But nearly all say the rush of tax legislation in recent years has increased their corporate clients' desire for Capitol Hill expertise.

"A lot of what has happened in this growth is frankly defensive," said Byrle M. Abbin, managing director of the office of federal tax services for Arthur Andersen & Co. "Your clients need help, and they are going to go where they can get it."

Since the coming of the Reagan administration, Congress has enacted major changes in the tax code five times: in 1981, 1982, 1984, 1986 and 1987. All of those bills except the 1981 tax cut have been driven by the need to raise revenue to reduce the federal deficit. That focus on revenue has vastly altered the strategy of tax lobbyists.

Where corporations once could try to introduce new loopholes to cut their taxes, they now are trying only to save what they already have, or to escape tax-increasing provisions through special exceptions or "transition rules" that phase in the impact of a new law.

The focus on revenue and special breaks has opened the door to lobbyists with technical expertise. The process demands economic analysis that explains, for example, how a company in a senator's state will be hurt if a pending deal cannot retain current tax advantages. And demonstrating that an amendment will not significantly increase the federal deficit might induce a legislator to propose it.

"Policy has taken more of a back seat and revenue is driving tax law, so it becomes much more complicated," said Mark McConaghy, a Price Waterhouse principal who was staff chief of the congressional Joint Committee on Taxation. "It's good for our business. Every time it happens we hire more people."

McConaghy may have been joshing, but he also was describing in brief the recent history of Price Waterhouse, the firm that is generally agreed to have pioneered the expansion among the Big Eight accounting firms into legislative work.

It began in 1981 when Bernard M. (Bobby) Shapiro, McConaghy's predecessor as joint-committee staff chief, moved to Price Waterhouse to head its Washington tax office. A lawyer and a C.P.A., Shapiro was determined to translate his Hill experience into the private sector.

The congressional staff he left behind, a relatively unknown group of economists and lawyers providing technical expertise to the House and Senate tax-writing committees, is one of the silent powers of the Hill. It generates the revenue figures and the policy discussions that often determine tax legislation.

For more than 15 years, Shapiro had watched the way Congress works and had seen the results that a team of economists, lawyers and accountants could produce.

"If you write the tax laws that way, why can't you have a staff like that in private practice here?" Shapiro said.

At the time, the Price Waterhouse tax office included three people. In 1983, Shapiro was joined by McConaghy, and the pair began hiring in a serious way. From the joint committee and the Treasury Department, they took a number of top-level economists and lawyers. From the Internal Revenue Service they hired former legislative liaison Tom Persky. Later, IRS Commissioner Roscoe L. Egger Jr. returned to Price Waterhouse, his employer before he took over the tax service.

Experts familiar with Congress came to head groups specializing in banking, energy and others. And Shapiro and McConaghy brought in economist Larry L. Dildine from the Treasury to set up a team to perform economic analyses and project federal revenue. That seemingly obscure function, in which the effect of various tax plans on revenue can be projected through computer analyses, became one of the most important in the office.

Only one other private firm in Washington, the Policy Economics Group, was doing revenue estimates at the time. It was a daunting task that required extensive data bases and computer modeling. The macroeconomic forecasting firms had tried it with something less than accuracy.

Today, Price Waterhouse can produce revenue estimates that equal -- and sometimes serve to correct -- the official numbers produced by the Treasury and the joint committee. The firm's national tax office staff numbers 75 to 80, including five registered lobbyists. And Price Waterhouse has been involved in a plethora of tax issues, from working with a business coalition in favor of the 1986 law to helping the mutual-funds industry craft an amendment to the 1987 law that was accepted at the 11th hour.

Other firms, meanwhile, did not stand idly by. In late 1986, Peat Marwick Main & Co. purchased the Policy Economics Group. Headed by former Treasury revenue estimator Thomas Vasquez, the policy economics group had been building up its revenue capability since 1983.

Harvey Galper, the highly regarded Brookings Institution tax economist, went to work for the Peat Marwick policy group soon after. Former Treasury and Office of Management and Budget chief economist J. Gregory Ballentine also is at Peat Marwick.

The firm does not lobby per se, but provides instead what Vasquez called "tactical support" to lobbyists and trade associations, as well as consulting for state, local and foreign governments.

Other firms also are swelling their ranks with tax and economic specialists from Congress and the Treasury. Former Treasury deputy assistant secretary Emil Sunley, an economist, works at Deloitte, Haskins & Sells. Pamela Pecarich, who was on the staff of the House Ways and Means Committee, heads a tax policy group at Coopers & Lybrand that does analysis and small-scale revenue estimating.

Two former staff aides to Senate Finance Committee member John C. Danforth (R-Mo.) are at Arthur Young & Co. Former Treasury official George N. Carlson now does his economic work for Arthur Andersen, which also recently hired former Chamber of Commerce lobbyist Rachelle Bernstein. And former Senate Finance Committee staffer Mary Frances Pearson is with Ernst & Whinney.

"I was the first tax economist to go with one of the Big Eight accounting firms," said Sunley, who was at Treasury during the Carter administration. "Almost every senior economist in a tax policy position who has left Treasury since then has ended up with an accounting firm."

Nearly all the legislative issues that accounting firms work on tend to be narrow and technical, albeit important to a particular client.

At Touche Ross -- which requires its officials to register as lobbyists before they meet with members of Congress and their staffs -- Spooner was involved in an effort to prevent Congress from taxing the inflationary gains in a company's inventory, and worked against a proposal to reduce deductions for such "intangibles" as customer lists.

There are several reasons for such a narrow focus, the firms' partners say. A Big Eight accounting firm easily can have hundreds of corporate clients, each with disparate interests in legislation before Congress. Conflicts of interest can arise more easily than they can within law firms, which tend to have fewer clients.

The accounting firm culture also may discourage frenzied lobbying. Accountants are trained to be aloof and independent auditors who perform to their standards even if the client wishes otherwise. Lawyers, on the other hand, are taught to be advocates for one side or another.

Accounting firms are divided about the wisdom of expanding heavily into lobbying. As one lobbyist put it: "At our firm we have trouble talking about the 'L-word.'"

"Lobbying is what everybody else does, education is what we do," joked Donald H. Skadden, vice president of taxation for the American Institute of Certified Public Accountants.

Some firms eschew direct lobbying altogether.

"We don't have people who know people, the Gucci-shoe types," said Abbin of Arthur Andersen. "Our basic function is auditing, which carries with it a heavy sense of responsibility. If one goes too far out to lobby, does it taint everything the firm might do? We have chosen not to do that."

Even Abbin's firm does a bit of tangential lobbying, however. When the Senate last year considered ending a tax practice that allowed business owners to pass the business to their children without full payment of capital gains taxes, the Andersen firm was quick to notify clients who might be affected.

A letter sent by an Andersen office to affected clients said in part: "I trust this information will encourage your association to act quickly in the fight against the legislation." However, Congress ended the practice.

Accounting firms sometimes influence the shape of tax legislation in unexpected ways. Price Waterhouse, for instance, re-estimated the revenue impact of a House proposal reducing deductions for reserves companies set up for vacation pay -- and found it would raise more than 10 times more revenue than congressional estimators on the Joint Committee on Taxation had projected.

The firm did the estimate at the behest of companies opposed to the change.

The intensified legislative activity by accounting firms has prompted some grumbling in legal circles that accountants and the lawyers who work with them may be stepping over the line. A recent meeting of the American Bar Association, for instance, included a panel discussion of the "unauthorized" practice of law.

Accounting lobbyists respond that there is plenty of business to go around, and that they screen their lobbying clients carefully to avoid potential conflicts. Shapiro pointed out that biased economic analysis would ruin the credibility of the firm's work.

The mainstay of the accounting business still is financial auditing, which accounts for about 60 percent of accounting revenue. Another 20 percent comes from management consulting, and the other 20 percent is from tax practice -- a small proportion of which involves congressional work.

"I think there is a strong reluctance among all the firms to do this stuff," said Persky, of Price Waterhouse. "But by the same token, I think people in the tax world know that if you are going to be a player in the tax law, you have to be a player in Washington. They look at $10 billion worth of transition rules and say, 'Why not me?' "