An audit will be made on the dealership terminations by General Motors Co. and Chrysler Group by the inspector general for the U.S. Treasury Department’s financial bailout. It is expected that the inspector will be announcing this in the congressional testimony.

The audit will be conducted simultaneously with the dealer-rights negotiations that will start anytime soon, involving the two automakers, dealer groups, key lawmakers and the Obama administration’s auto task force. It is likely that a separate audit will be conducted of Treasury’s ownership and management of GM since emerging from bankruptcy. Continued after the jump!

Neil Barofsky, special inspector general for Treasury’s $700 billion Troubled Asset Relief Program, was appointed by President Barack Obama and confirmed by the Senate in December 2008. Barofsky is set to deliver a written testimony before the Senate Banking Committee, stating that the dealer audit “will examine the process used by General Motors and Chrysler to identify which automotive dealerships should be maintained or terminated.”

The audit came about due to complaints received from many dealers that the process was arbitrary and had led to the closing of profitable stores. In response, GM and Chrysler had said that the terminations were “carefully chosen to increase the automakers’ prospects for restoring profit after bankruptcy.”

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