The paper said that City faced a "huge" penalty for breaching the regulations, which were introduced by European governing body UEFA to prevent clubs from spending beyond their means.
According to the paper, French champions PSG will also be penalized by UEFA's Club Financial Control Body (CFCB), which was due to meet for the first time on Tuesday and Wednesday.
A central tenet of FFP is that clubs were forbidden from making losses of over 45 million euros ($62.1 million) during the 2011-12 and 2012-13 seasons, with exceptions for certain forms of expenditure.
Each bankrolled by mega-rich owners from the Middle East, City and PSG both spent heavily on new players during that period.
City's outlay helped them to win the Premier League title in 2012, while PSG claimed the Ligue 1 crown the following season.
Clubs found guilty of contravening FFP regulations could face punishments including exclusion from the Champions League or the stripping of titles.
However, the Telegraph report, which did not cite any sources, said that City and PSG were more likely to be hit with either a financial penalty or a transfer embargo.
The paper said that "fewer than 20" clubs were at risk of sanctions. In a statement sent to the Telegraph, UEFA said: "UEFA will only communicate once decisions have been taken by the CFCB investigatory chamber, which we anticipate will happen at the beginning of May."
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