What are questioned costs in a single audit?
A questioned cost is an expenditure the auditor challenges — because it may violate a requirement, because it is unsupported, or because it appears unreasonable. The auditor must report known or likely questioned costs above $25,000 for a compliance requirement type of a major program, and known questioned costs above $25,000 for a non-major program (2 CFR 200.516(a)(3)-(4)).
Last verified: 2026-09-20 · Every figure links its source.
What are questioned costs?
The term is defined in the Uniform Guidance definitions section and turns on three situations: a possible violation of a statute, regulation or award term; a cost not supported by adequate documentation; or a cost that appears unreasonable and does not reflect the actions a prudent person would take (2 CFR 200.1). A questioned cost is not a demand for repayment — it is the auditor flagging a cost for the federal agency to decide on.
Source: 2 CFR 200.1 · 2 CFR 200.516 · Last verified: 2026-09-20
Known versus likely questioned costs
| Term | What it means | Reporting line |
|---|---|---|
| Known questioned costs | Costs the auditor identified specifically in the items tested | Above $25,000 for a compliance requirement type of a major program, and above $25,000 for a non-major program (200.516(a)(3)-(4)) |
| Likely questioned costs | The auditor's best estimate of the total in the population, projected from the sample | Above $25,000 for a compliance requirement type of a major program |
This is why a $3,000 error found in a sample can produce a reported finding: projected across the population it may exceed the line. The finding must also state how the projection was made and whether the sample was statistically valid, and give a description of how widespread the condition is (2 CFR 200.516(b)).
Source: 2 CFR 200.516 · Last verified: 2026-09-20
What happens after questioned costs are reported?
Management writes the corrective action plan, and the federal awarding agency or pass-through entity issues a management decision on the finding: whether it accepts the corrective action, and whether repayment is required (2 CFR 200.521). The cognizant or oversight agency for audit coordinates the process (2 CFR 200.513). Repayment is the agency's call, not the auditor's.
Source: 2 CFR 200.521 · 2 CFR 200.513 · 2 CFR 200.511 · Last verified: 2026-09-20
Do questioned costs affect low-risk auditee status?
They can. One of the low-risk criteria is that none of the federal programs had questioned costs exceeding five percent of total federal awards expended for a Type A program in either of the two preceding audit periods (2 CFR 200.520(e)). Losing the status doubles required major program coverage from 20 percent to 40 percent (2 CFR 200.518(f)).
Source: 2 CFR 200.520 · 2 CFR 200.518 · Last verified: 2026-09-20
Questions and answers
What is the reporting threshold for questioned costs?
The auditor must report known or likely questioned costs above $25,000 for a compliance requirement type of a major program, and known questioned costs above $25,000 for a non-major program.
Do questioned costs have to be repaid?
Not automatically. The federal awarding agency or pass-through entity issues a management decision on the finding, and that decision determines whether repayment is required.
Want the finding rates behind this? Open the statistics pages.
This is public-record information, not accounting or legal advice.