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`He has accepted a complaint and he is following the procedure laid down for him,` said a spokeswoman for Lyon.
John Lyon, the Parliamentary Commissioner for Standards, will examine whether Smith has broken any rules and whether a full investigation is necessary.
The Home Secretary denies doing anything wrong.
"He has accepted a complaint and he is following the procedure laid down for him," said a spokeswoman for Lyon.
Media reports say Smith has claimed at least 116,000 pounds in expenses towards her second home, the family house where her husband and children live in central England.
She says she spends most of her time at a house in southeast London owned by her sister and lists this as her main home.
Smith said she had always followed the rules and was happy to answer any questions about her expenses.
Newspapers said the complaint being considered by the parliamentary commissioner had been made by Dominic and Jessica Taplin, Smith's neighbours at her address in the capital.
They were quoted as saying Smith spent only a couple of nights a week at the house and was rarely there when parliament was in recess.
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