The report was conducted by the Israeli army and reported by public radio on Sunday.
The report suggests that the Egyptians, believing Israeli soldiers were smugglers, opened fire at them from a distance of about 80m and 200m inside Israeli territory on Saturday, the radio reported.
A senior Egyptian police officer will contribute to a final report on the incident, which has cast a shadow over a scheduled summit on Sunday between Hosni Mubarak, the Egyptian president, and Ehud Olmert, the Israeli prime minister.
Tshai Hanegbi, chairman of the parliamentary defence and foreign affairs committee, told the radio: "If mistakes were made in this incident, they were made in good faith and should not affect relations between Egypt and Israel.
"The Sharm el-Sheikh summit is primarily an opportunity for Mubarak and Olmert to get to know each other. The two countries have become much closer and we hope for a personal relationship and mutual trust between the two leaders."
On Saturday, Egypt's official MENA news agency said Israeli soldiers dragged the bodies of the two policemen onto Israeli territory after shooting them on the Egyptian side of the border.