What are questioned costs?

Questioned costs are expenses that are questioned by the auditor because of an audit finding (See 2 CFR 200.84). A questioned cost: 1) may result from a violation or possible violation of a state, regulation, or terms and conditions of a federal award, 2) may not be supported by adequate documentation, or 3) may appear unreasonable (does not reflect the actions that a prudent person would take in the circumstances).