The D.C. Department of Human Resources, which employs nearly one of every four city government workers, ignores its own established safe-guards against favoritism in the hiring and promotion of employees, according to a preliminary report prepared by D.C. Auditor Matthew S. Watson.

Watson's investigation found two instances in which there was "a strong indication" that suspended DHR director Joseph P. Yeldell helped persons get jobs in violation of the department's merit system and two alleged improper hirings in which Yeldell was involved.

Though none of the questionable hirings appeared to fall udner the narrow definition of the city personnel regulations' nepotism statute, the draft report recommended that departmental disciplinary hearings be started to determine if anyone involved had acted improperly.

The report was the third one released in the past three days in response to published reports that began nearly two months ago alleging nepotism and cronyism in hiring in the city's largest department.

Yesterday The Washington Post reported that another preliminary report by Watson, chief investigator for the City Council, had found no hard evidence of impropriety but raised questions about the hiring by the city government of Yeldell's wife Gladys as a programs analyst in the city's personnel department.

On Tuesday, Mayor Walter E. Washington released a report by his Office of Municipal Audit and Inspection that found that Yeldell "may have" improperly helped two relatives obtain jobs in DHR. The probes by both auditors are among six different investigations, including one by the U.S. Attorney's Office here, into DHR leasing, contracting and hiring procedures.

"As a result of the general disregard of adopted competitive procedures and the failure to fully document official personnel files," Watson said in his report released yesterday, "it is difficult, if not impossible, to determine whether favoritism was a factor in specific hiring and promotion actions."

"Our review of selected hiring actions, including the cases alleged in the media, however, indicates a pattern which strongly suggest favoritism," the reports says.

Watson, who indicated yesterday he was disturbed yesterday that that the findings had been published before the report was complete and officially released, emphasized that some of the conclusions drawn in preliminary documents might be altered after further investigation.

Gary Myers, a lawyer for Yeldell, said "We have virtually no confidence in the Watson report." Myers said the entire investigation by the D.C. auditor may be have been "irrevocably tainted" by premature disclosure and discussion of the report's findings.

The report was most critical of DHR's general personnel operation, saying that past procedures recommended to ensure that hiring and promotional abuses did not take place had not been implemented.

The departmen's official personnel files do not properly document the rate of pay for more than 5 per cent of the agency's employees, the report found. "Although the current rate of pay in most casts is proper, lack of documentation allows irregular practices to occur without detection," the report reads.

Even though DHR adopted in April, 1975, its own personnel merit system plan, in which promotions and hirings were to be made primarily on the basis of qualifications, the report says, three of every four promotions that occurred during a 15-month period ending Sept. 30, 1976 were "exceptions to the plan."

One way the department bypasses its own regulations, the report says, is to hire persons without competition in temporary positions on the basis that the jobs will not be permanent. The jobs are later made permanent and the incumbents are transferred to the regular jobs on the basis that they have "in-depth knowledge of the position.

"This circular reasoning is not only patently unfair," the report say, "but appears to specifically violate the merit plan which forbids job assignment actions tht are designed to give preference to a predetermined individual . . ."

The report also contests a "career ladder" system of promotions frequently used in DHR that allows employees to progress through a series of positions to a predetermined grade level.

The report says that the department has not followed guidelines aimed at making sure that the career ladder promotions do not circumvent regularly required competition of job advancements. As a result, the report says, many career ladder promotions are simply promotions without competitions.

Watson's reports disclosed the same evidence of Yeldell's involment in the hiring in DHR of a Yeldell relative employed by DHR that had been reported by the mayor's investigator on Tuesday.

Watson said that Yeldell had personally asked the personnell department to evaluate the job application of Paula G. Fisher, second cousin of Yeldell, and later forwarded her application to a subordinate in the department where she was subsequently hired.

Watson concluded simply that "Paula Fisher was hired noncompetitively." David Legge, the mayor's investigator, had concluded that Yeldell's actions may have permitted Mrs. Fisher to obtain preferential treatment. Even though her relation was not close enough to Yeldell to fall under the nepotism statute, Legge recommended that the D.C. corporation counsel determine if Yeldell had acted improperly.

Watson also found another improper hriing in which Yeldell appeared to be involved because his name had been used as a reference. An unnamed woman was hired temporarily in a GS-13 position without competition. When the temporary status expired, the person was brought on permanently, the report says, but without competing for the job.

One other noncompetitive hiring to which the report linked Yeldell was the employment in early 1976 of Eugene Brown in DHR's reciprocal support and family enforcement program.

Charles Baron, an assistant to Yeldell, said in a Dec. 4, 1975 note to the personnel office that, "attached is the resume aid SF171 of Eugene Brown who we would like to bring on board . . . Please review and take appropriate action. A position number will be provided by JPY," meaning Joseph P. Yeldell.

The position was not advertised until about six weeks after Baron's note. Brown ranked sixth of a list of nine candidates rated highly qualified, the report says, but nevertheless got the job.

The report also found that Leroy Washington, a political ally of Mayor Walter E. Washington who had quit his job in DHR to run unsuccessfully for City Council in May, had been hired for a job in DHR for which he never applied.

The report implied that the hiring of Washingtoin was improper because the merit promotion plan "makes it a specific violation to hire an individual not in the best qualified group."

However, Yeldell, who acknowledged at yesterday's press conference that he personally hired Leroy Washington, said Washington was entitled to priority hiring because he was a former employee who had expressed a desire to return to work at DHR and was qualified for the job.

Yeldell defended all of his actions alleged in the report to be improper as valid and ordinary personnel procedures.

"Under no condition have I ever moved into the operation of the personnel department and said you do this and you do that," Yeldell said. "The things that come back as favoritism in this report is standard operating procedure to me."

Watson's report also said that three DHR employees named in newspaper accounts "do not appear to have met the minimum qualifications" for the jobs they were given or promoted to.

Those three persons were William T. Donnell and his wife Judy, who are, respectively, the son-in-law and daughter of Cleveland Dennard, president of Washington Technical Institute; and Joseph Turner, who sources have said is Yeldell's brother-in-law but Legge found of no relation to Yeldell. Turner is a GS-4 clerk, Mrs. Donnell is a GS-11 human resources specialist and her husband is a GS-9 vocational rehabilitation specialist.

Watson's report listed the minimum qualifications for the jobs, but did not disclose what experience the three persons claimed.

The report concluded by recommended that until the city sets up its own independent merit personnel systme, all DHR personnel actions should be approved by someone outside the department.