The investigation has found that up to $94 million in rebates might be ineligible because of improper documentation, USA Today said Monday.
The $3 billion program was designed to help the economy, and officials say while there is no indication of widespread fraud nine dealers have paid a total of more than $71,000 in fines.
The program had some other problems, officials said.
Trade-in vehicles that were supposed to have been destroyed may have been illegally shipped overseas, said Gary Middleton, a program manager for the Department of Transportation's inspector general's office.
Letters to dealerships about ineligible payments have resulted in refunds to the government of $878,000, Middleton said.
"We're now concentrating our efforts on making sure dealers and disposal facilities are continuing to comply with the rules and regulations of the program," Assistant Inspector General Joseph W. Come said in a report.
"Our activities include conducting field visits to make sure vehicles are being disposed of properly and scrutinizing transactions for possible violations. If we find that a dealer or disposal facility is not compliant with the rules of the program, the agency will take civil action."
Almost 19,000 dealerships participated in the clunker program, which paid rebates of up to $4,500 to more than 678,000 new-car buyers, the report said.