What is Questioned Cost?

Questioned costs refer to expenses claimed by a contractor or grantee that are disputed or not clearly allowable under the terms of a contract or grant agreement. These costs may arise from issues such as inadequate documentation, non-compliance with regulations, or inappropriate charges. Auditors often identify questioned costs during financial audits, and they may require further investigation or justification from the entity involved. Ultimately, these costs may be disallowed, leading to financial adjustments or reimbursements.