A Chicago-based accounting firm headed by a friend of D.C. Deputy Mayor Alphonse G. Hill received more than $200,000 in city auditing contracts within a year after the firm opened a branch office in the District, according to city records.

The deputy mayor assisted the Hill, Taylor & Co. accounting firm in a variety of ways, including recommending it for city contracts, expediting city checks for its work and allowing his longtime friend, James Hill Jr., the firm's managing partner, to stay at Alphonse Hill's home, according to a former partner in the firm.

A federal grand jury here is investigating whether Alphonse Hill received kickbacks or other financial interests in return for helping James Hill's firm obtain city contracts.

Alphonse Hill declined to comment yesterday and James Hill could not be reached. The two men previously have strongly denied any wrongdoing.

The two Hills, who are not related, have said that they have been friends since they met while attending graduate school at the University of Chicago in the mid-1960s. Alphonse Hill has said that he initially recommended the firm for city business because one of its partners, Michael P. Smith, was well-versed in the city's complex financial system.

Smith, who said he was scheduled to appear before the grand jury yesterday, stated in an interview Tuesday night that he saw no impropriety in the firm's dealings with the city.

"Obviously, Al Hill liked Hill, Taylor. Al encouraged Jim [Hill]," said Smith, who left the minority-owned company in late 1983. "He [Alphonse Hill] seemed to be doing as much as he could for all the minority firms."

A D.C. inspector general's investigation of Alphonse Hill while he was the city controller also examined the relationship between the two Hills, particularly in light of the firm's success in obtaining city contracts soon after it opened a branch office here, according to Joyce Blalock, who was the inspector general at the time.

Blalock said in a recent interview that she was "surprised" when she learned that the auditing contracts she was examining went "to a new firm, and the senior partner was Al's former roommate."

Alphonse Hill said recently that he once shared an apartment with James Hill for 10 months after their graduation in 1967.

Blalock said her investigation of Hill, which was completed in the spring of 1982 without any finding of wrongdoing, was triggered by allegations from a private contractor who said he made a $3,000 cash payoff to Alphonse Hill while he was the city controller in the early 1980s.

Curtis Hill, a former program analyst in the controller's office between 1980 and 1981 and who later formed a graphics design firm, told then-city administrator Elijah B. Rogers that he had to pay Alphonse Hill in connection with receiving a $25,000 contract for graphics work on an annual city audit report, according to Blalock and Alphonse Hill.

Rogers said yesterday that he had asked Blalock to investigate Curtis Hill's allegation after interviewing him and informing him that "if you want to make these allegations we are going to treat them seriously and turn them over to the appropriate officials. The guy said fine and I said proceed."

Rogers said that when he interviewed Curtis Hill he also told him that if his allegations were true he may have implicated himself in wrongdoing.

Rogers said that Blalock subsequently provided him with a report recommending that no action be taken against Alphonse Hill. Blalock, who said she could not substantiate Curtis Hill's allegation, said her investigation was hampered when Curtis Hill's attorney refused to allow him to be interviewed.

Blalock said she referred Curtis Hill's allegation to the U.S. attorney office sometime in mid-1982. No federal charges were filed against Alphonse Hill. Sources said yesterday that federal investigators in the current probe of Alphonse Hill, which began sometime in mid-1985, have decided to reexamine the Curtis Hill allegation.

Matthew Watson, Curtis Hill's attorney, said his client declines comment. Curtis Hill is not related to either Alphonse Hill or James Hill.

Alphonse Hill, who last week disclosed that Curtis Hill had made the allegations, denied asking for or accepting a payoff from Curtis Hill. "The guy is a little spacey," Hill said last week.

Smith, who left the Hill, Taylor firm in September 1983, said that FBI and Internal Revenue Service agents questioned him last fall about the relationship between Alphonse Hill and James Hill.

Smith, who was employed by the Arthur Andersen & Co. accounting firm and had worked extensively on the city's new financial management system between 1976 and 1980, said that he teamed up with James Hill to form Hill, Taylor's District office after he left Arthur Andersen. Smith, who said he was introduced to James Hill by Alphonse Hill, said his familiarity with the city's financial system was the main reason the firm was tapped to perform at least four contracts for the city, totaling more than $200,000, in the firm's first year.

Smith said that when the firm first opened its office here it was dependent on its city work to meet its expenses and when the city was late paying the firm he asked Hill to help expedite the payments. "What Al did for us was to cut through the red tape. What Al did for us was to make sure the check got cut," Smith said.

Smith said that as part of the firm's early efforts to curtail its expenses James Hill stayed at Alphonse Hill's residence while visiting here.