The FFP rules are intended to prevent clubs receiving unlimited amounts of money through inflated sponsorship deals with organisations related to the owners.
"The Premier League has previously contacted Manchester City to request information regarding recent allegations and is in ongoing dialogue with the club," the Premier League said in a statement.
"The league has detailed financial regulations and strong rules in the areas of Academy player recruitment and third-party ownership.
"We are currently investigating these matters and will allow Manchester City every opportunity to explain the context and detail surrounding them."
Manager Pep Guardiola was asked on Friday whether he was concerned his achievements at City would be tainted by the allegations, but he told reporters: "No, absolutely not.
"The club made a statement, so I can't add more than that. The club are open, hopefully it can finish as soon as possible.
"I trust a lot what the club has done, because I know them and hopefully they can solve it as soon as possible."
German publication Der Spiegel reported in November that City's Abu Dhabi owners inflated sponsorship agreements in order to comply with FFP requirements.
City's statement on Thursday said accusations of financial irregularities were entirely false.
City host eighth-placed Watford on Saturday and Guardiola hailed their manager Javi Gracia, who looks set to lead them to their best-ever finish in the Premier League.
"It's incredible what he's done, one of the toughest games we had," Guardiola, who was voted February's Premier League manager of the month, said.
"In the last nine games, they have physicality, quality one-on-one, strong in the air, well organised... what he's done has been incredible."
(This story refiles to change headline.)
(Reporting by Rohith Nair in Bengaluru; Editing by Toby Davis and Christian Radnedge)
