Closing out a federal grant and keeping the records

What closeout is, and who does it

Closeout is the process in which the federal agency or pass-through entity confirms that all administrative actions and all required work on an award are complete (2 CFR 200.1). The agency closes a recipient's award, and the pass-through entity closes a subrecipient's subaward. If the organization doesn't finish its part, the agency or pass-through entity "must proceed with closeout based on the information available" (2 CFR 200.344(a)). The federal agency "must make every effort" to finish closeout within one year after the period of performance ends (200.344(h)).

Start with the award or subaward terms and the awarding agency's or pass-through entity's current instructions. Those documents may impose program-specific or stricter requirements in addition to the Uniform Guidance (2 CFR Part 200). If the instructions appear to conflict, ask the awarding agency or pass-through entity for written clarification before acting.

The closeout clock

Every closeout deadline runs from the end of the period of performance, not from the date the work finished or the last invoice arrived.

The agency or pass-through entity may approve an extension "when justified" (200.344(b)–(c)). Costs must be incurred within the approved budget period. The exception is administrative closeout costs, such as preparing final reports, which may be incurred until the final reports are due but must be paid before that date (2 CFR 200.403(h)). Federal payments that exceed the amount the organization is authorized to retain are a debt to the federal government (2 CFR 200.346).

The final draw has its own deadline. DOJ says recipients can't draw any more funds after the liquidation period, and ASAP freezes DOJ award funds 120 days after the award ends (DOJ Grants Financial Guide, 3.2 and 3.18). In the HHS Payment Management System, a request after the liquidation period is "expired" and needs the awarding agency's approval (PMS, FFR updates). Federal grant payments and drawdowns covers the draw itself.

What the closeout package contains

The regulation requires "all reports (financial, performance, and other reports required by the Federal award)" (2 CFR 200.344(b)). The award lists them. DOJ's list is a typical federal example: a final SF-425 with no unliquidated obligations, a final performance report, any invention or property reports the award requires, the required recipient share included in the final report, and a reconciliation of the accounting records to the final financial report (DOJ Grants Financial Guide, 3.18). The SF-425 guide explains how to complete the final financial report.

A pass-through entity may add items and set an earlier date, since it needs its subrecipients' reports to close its own award. On a Nonprofit Security Grant Program subaward, for example, the state sets the closeout list and deadline; NSGP reporting and closeout shows published state deadlines shorter than 90 days.

If the final indirect cost rate isn't set, the recipient still files the final financial report on time and submits a revised one when the rates are final (200.344(b)). The agency adjusts the federal share after it receives the closeout reports, for example by disallowing costs or deobligating an unliquidated balance (200.344(f)).

What happens if the final reports don't arrive

If a recipient doesn't comply with the closeout requirements, including by not submitting all final reports, the federal agency "must report the recipient's material failure to comply" in SAM.gov through the Contractor Performance Assessment Reporting System (2 CFR 200.344(i)). The agency may also take other enforcement action under 200.339. Agencies and pass-through entities may review SAM.gov data when they set conditions on later awards (2 CFR 200.208(b)(1)), so an unclosed award can follow the organization.

What continues after closeout

Closeout doesn't end the organization's obligations. Under 2 CFR 200.345(a), these continue:

• The right of the agency or pass-through entity to disallow costs and recover funds after a later audit or review. It must make that decision and notify the organization "within the record retention period."
• The duty to return funds, and the right to receive remaining funds, from refunds, corrections, final indirect rate adjustments and similar transactions.
• Single Audit requirements under Subpart F. See Single Audit requirements.
• Property management and disposition rules in 200.310 through 200.316.
• Record retention and access under 200.334 through 200.337.

Equipment and supplies after the award

Equipment is tangible personal property with a useful life of more than one year and a per-unit cost at or above the lesser of the organization's capitalization level or $10,000 (2 CFR 200.1). The threshold was $5,000 before the 2024 revision, and agencies applied the revision to awards at different times (OMB, 2025 Compliance Supplement, Part 1), so check which version your award terms use.

The organization holds a conditional title. While the equipment serves its original purpose, the organization "must not dispose of or encumber its title or other interests without the approval" of the agency or pass-through entity (2 CFR 200.313(a)(2)), and it must keep using the equipment for the project "for as long as needed," whether or not federal funding continues (200.313(c)(1)). Property records and a physical inventory at least every two years continue while the equipment is held (200.313(d)).

When the equipment is no longer needed for the original project or other federal work, the organization must request disposition instructions if the award requires it. An item with a current fair market value of $10,000 or less per unit may be kept, sold or otherwise disposed of with no further obligation. For a more valuable item, the agency is owed its percentage share of the current value or sale proceeds, and if requested instructions don't arrive within 120 days the organization may keep or sell it (200.313(e)). Unused supplies worth more than $10,000 in total at the end of the period of performance, and not needed for another federal award, may be kept or sold, with the agency owed its share (2 CFR 200.314(a)).

How long to keep the records

The recipient and subrecipient must keep all federal award records "for three years from the date of submission of their final financial report" (2 CFR 200.334). For awards renewed quarterly or annually, the clock starts at the quarterly or annual financial report. The records include financial records, supporting documentation and statistical records. Federal agencies and pass-through entities "may not impose any other record retention requirements" except these:

The three-year rule doesn't apply to records the federal agency takes over (200.334(d)). Single Audit filings have their own rule: keep the data collection form and reporting package for three years from submission to the Federal Audit Clearinghouse (2 CFR 200.512(f)). If a subaward names a different starting event or a longer period, ask the pass-through entity which provision it relies on, and keep the records to the later date until it answers.

Electronic copies may replace paper originals under procedures with periodic quality-control reviews that guard against alteration and keep records readable (2 CFR 200.336). The access rights of the agency, the pass-through entity, inspectors general and the Comptroller General "last as long as the records are retained," and include reasonable access to staff for interviews (2 CFR 200.337).

A file that can answer questions later

A review after closeout tests whatever the organization kept. In DOJ OIG Audit Report 25-097 (2025), the grantee's board had voted to dissolve the organization, and it couldn't produce documentation for its program results or its costs. The OIG questioned the entire $748,998 drawn as unsupported. Dissolving didn't end the review.

Keep one award file that someone new could follow. It should hold the award and every amendment, written approvals, each approved budget version, procurement files, invoices with proof of payment, payroll and time records, reports as filed with their supporting worksheets, property records and disposition decisions, monitoring and audit correspondence, and the closeout notice. Name a person to hold the file after the staff who ran the award move on.

The federal grant compliance checklist puts the closeout dates on the award calendar from the start.