The Financial Reporting Council (FRC) told the House of Commons business select committee it had taken over "regulatory consideration" of the case from the Institute of Chartered Accountants in England and Wales.
No formal investigation has started, but the FRC is looking into the case.
It comes as City were found guilty by an independent commission of all charges relating to breaches of the Premier League's financial regulations between the 2009/10 and 2017/18 seasons, relating to artificially inflating the club's financial position by more than £900M.
City have appealed against the verdict with a final verdict expected before the end of 2026.
The FRC can assess the conduct of BDO, Manchester City's auditors, to ask whether if their audit was in line with the rules.
The independent commission which looked into City stated the club gave a "misleading impression" of the scheme used to disguise the origin of shareholder funds injected into the club to its auditors, who were "unaware" of it.
Manchester City have said they will appeal against the commission's decision, arguing that it contains "material errors, of law, principle and fact and is unsafe".