In December leaked Vatican documents suggested that around €200,000 (around £1460,000) was spent on his home that came from the Bambino Gesu Foundation.
On Thursday his lawyer, Michele Gentiloni Silverj, denied that the cardinal had authorised any such payments related to his apartment.
The statement from the heart of Catholicism confirmed a report in Espresso magazine that Giuseppe Profiti, the Bambino Gesu hospital's former president, and Massimo Spina, its ex-treasurer, were under investigation.
The Vatican did state that the investigation was ongoing but did not say when it originally began.
This is the latest in a series of scandals that have hit the Vatican in recent months.
The Vatileaks scandal hit the headlines after two books were released; The Merchants of the Temple and Avarice both reveal alleged financial mismanagement at the Vatican.
The books, claimed to be written from leaked documents, also praise Pope Francis for trying to change the way they claim the Vatican wrongly uses its money.
A report by journalist Emiliano Fittipaldi, among five defendants on trial at the Vatican in a leaked documents case, said the renovations totalled £335,110 (€422,000) - more than twice the 200,000-euro sum that Mr Fittipaldi revealed previously in a book that led to the leaked document charges.
The cardinals lawyer issued a statement saying the cleric never "gave indications or authorised" the hospital foundation to make any payments relating to his apartment.
The cardinal has insisted he paid for the renovations himself and has already said he will make amends with a £119,183 (€150,000) donation to the hospital for medical research.
He emphasised that the donation was voluntary.
The cardinal was formerly the secretary of state, the Vatican's number two official, under Pope Benedict XVI and for the first months of Francis' papacy.
The 81-year-old no longer holds any top Vatican post.
Earlier in the month a Spanish priest, Msgr Lucio Angel Vallejo Balda, involved in the Vatican document leak scandal has admitted passing on classified documents.
The focus of the Holy See trial is around two books which accuse the Vatican of financial mismanagement, and argue that Pope Francis has significant internal opposition within the Vatican.
The two books were released in 2015, based on the leaked documents.
Five people, including the two Italian journalists who wrote them, are also on trial facing jail terms of up to eight years.