Federal grant compliance checklist: from award terms to closeout

Which rules control your award

Three layers of rules apply to most federal awards. The Uniform Guidance at 2 CFR Part 200 sets the government-wide baseline. The awarding agency adds its own program rules and writes the terms into the award. When the money reaches you through a state or another organization, that pass-through entity can add requirements to the subaward (2 CFR 200.332(b)(3)).

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. If the instructions appear to conflict, ask the awarding agency or pass-through entity for written clarification before acting.

Your role decides who you answer to. Under the definitions in 2 CFR 200.1, a recipient receives an award directly from a federal agency. A subrecipient receives a subaward from a pass-through entity, and that entity's authority over the subrecipient "flows through the subaward agreement." A subaward does not include payments to a contractor. Most of the duties below apply to recipients and subrecipients alike, but a subrecipient reports to, requests approval from, and is paid by the pass-through entity.

The current Part 200 text comes from OMB's 2024 revision, which took effect October 1, 2024. OMB did not require agencies to apply it to awards made earlier (89 FR 30046). If your award is older, check which version its terms adopt.

1. Read the award before you spend

The award document is the controlling record. Read it, and any subaward, before anyone signs a contract or places an order.

• Find the approved budget, the period of performance and the budget period. Costs must be incurred during the approved budget period, apart from administrative closeout costs (2 CFR 200.403(h)).
• List every condition that must be met before you draw funds or start work.
• Note the payment method, the report forms and due dates, and the agency or pass-through contact for approvals.
• Note any key personnel named in the award. Changing them requires prior written approval (2 CFR 200.308(f)(2)).
• Do not count on costs from before the start date. Pre-award costs are allowable only if they would have been allowable afterward and only with the federal agency's written approval (2 CFR 200.458).
• Keep your SAM.gov registration active for as long as you hold an active award, and review it at least once a year (2 CFR 25.200(b)(2)).

2. Set up the books and written procedures

Your financial system must be able to show where each federal dollar came from and where it went. 2 CFR 200.302(b) requires it to:

• Identify each award by Assistance Listing title and number, federal award identification number, year, and federal agency or pass-through entity.
• Record the amount, source and spending of federal funds, backed by source documents.
• Compare spending with the budget for each award.
• Include written procedures for requesting and managing federal payments, and written procedures for deciding whether a cost is allowable.

You don't need a separate bank account, but you must be able to account for all federal funds received, obligated and spent (2 CFR 200.305(b)(9)). The internal control rule in 2 CFR 200.303 also requires you to document your controls, monitor your own compliance, act promptly on problems, and protect personal information.

Books that mix grant activity with everything else can cost the whole award. In a September 2025 audit, the Justice Department's Inspector General found that a nonprofit grantee's general ledger had "commingled" all its financial activity, and it questioned every dollar the grantee had drawn as unsupported (DOJ OIG Report 25-097).

One more duty runs for the life of the award. If you have credible evidence of fraud, bribery, a conflict of interest or gratuity violation, or a False Claims Act violation connected to the award, you must disclose it in writing to the agency, its Inspector General and any pass-through entity (2 CFR 200.113).

3. Build the report calendar

The award sets the reporting schedule. Federal rules require financial reports no less than annually and no more often than quarterly, unless the agency has imposed a specific condition (2 CFR 200.328(b)). Performance reports follow the same limits (2 CFR 200.329(c)).

• Put every report date on one calendar, financial and performance, for each award.
• Recipients file the government-wide Federal Financial Report (SF-425) with the agency. Subrecipients use the pass-through entity's form and dates. The SF-425 guide covers the form line by line.
• Between reports, tell the agency or pass-through entity about problems, delays or adverse conditions that will affect milestones or objectives, and about developments that let you finish sooner or for less (2 CFR 200.329(e)).
• Make sure the numbers in each report trace to the accounting records.

4. Know your payment method and manage cash

Federal payment rules aim to shorten the time between receiving federal cash and paying it out (2 CFR 200.305(b)). Advance payment is the default for an organization with written cash procedures and an adequate financial system. Reimbursement is used when those conditions are not met, when a specific condition applies, when the organization asks, or for construction.

• Confirm from the award whether you are paid by advance, by reimbursement, or both, and which payment system you use.
• Draw advances only for immediate cash needs.
• Use available program income, rebates, refunds, contract settlements, audit recoveries and interest before you request more cash (200.305(b)(5)).
• Keep the records that support each draw with the draw.

The payments and drawdowns guide covers advances, reimbursement, interest and payment systems.

5. Test each cost before you charge it

A cost in the approved budget still has to pass the allowability tests in 2 CFR 200.403. It must be necessary, reasonable and allocable to the award, within the award's limits, consistent with your policies for non-federal work, treated consistently as direct or indirect, adequately documented, and not charged to another federal award or used as match elsewhere.

• Back salary and wage charges with records that reflect the work actually performed. Budget estimates alone do not qualify (2 CFR 200.430(g)).
• Reduce the charge for any discount, rebate, credit or refund.
• Charge indirect costs only at a negotiated rate or at the de minimis rate of up to 15% of modified total direct costs (2 CFR 200.414).

The allowable costs guide explains each test, the direct and indirect split, and the cost items that cause problems.

6. Get written approval before listed changes

2 CFR 200.308(f) lists changes that require prior written approval from the agency or pass-through entity. They include a change in scope or objective, a change in named key personnel, more federal money, a change in cost share, new subaward activity, moving participant support funds, and a no-cost extension beyond any one-time extension the award allows. Some cost items, such as equipment purchases, need their own approval.

• Ask before you spend. Prior approval means written approval obtained in advance from an authorized official (2 CFR 200.1).
• Ask for the decision and governing provision in writing, and file it with the award.

The budget changes guide covers each trigger, the 10% transfer rule and extensions.

7. Buy under written procurement procedures

A nonprofit or local government that buys goods or services with federal funds must maintain and use documented procurement procedures that meet the federal standards (2 CFR 200.318(a)).

• Adopt written conflict-of-interest standards. No employee, officer, agent or board member with a real or apparent conflict may take part in selecting, awarding or administering a contract (200.318(c)(1)).
• Keep a file for each purchase showing the method chosen, the contract type, why the contractor was selected or rejected, and the basis for the price (200.318(i)).
• Before soliciting bids or quotes, identify the procurement method and thresholds that apply under the current federal rules, your written procedures, state or local law, and the award terms.

8. Track property and keep records

Equipment bought with federal funds stays under federal rules after the purchase. 2 CFR 200.313(d) requires property records with a description, serial or other ID number, funding source, title holder, acquisition date, cost, federal share, location, use, condition and any disposal data.

• Take a physical inventory and reconcile it to the records at least once every two years.
• Investigate any loss, damage or theft, and notify the agency or pass-through entity when it will affect the program.
• When the equipment is no longer needed, ask for disposition instructions if the award requires it (200.313(e)).
• Keep all award records for three years from the final financial report. Keep them longer if litigation, a claim or an audit starts first, if you receive written notice to extend, and for three years after final disposition of property (2 CFR 200.334).

The agency, the pass-through entity and Inspectors General have a right of access to award records, and to staff for interviews about them (2 CFR 200.337).

9. Check whether a Single Audit applies

An organization that spends $1,000,000 or more in federal awards during its fiscal year must have a Single Audit or a program-specific audit for that year (2 CFR 200.501(a)). The $1,000,000 level applies to fiscal years beginning on or after October 1, 2024 (OMB 2025 Compliance Supplement, Part 1).

• Add up federal spending from every award, whether received directly or as a subrecipient. Payments you receive as a contractor do not count (200.501(g)).
• Below the threshold, no Single Audit is required, but your records must still be available for review (200.501(e)), and the cost of an audit generally may not be charged to the award (2 CFR 200.425(a)(2)).
• If an audit is required, file it with the Federal Audit Clearinghouse by the earlier of 30 days after you receive the auditor's report or nine months after the fiscal year ends (2 CFR 200.512(a)(1)).

The Single Audit guide covers how spending is counted and what the audit tests.

10. Reconcile and close

Closeout starts when the period of performance ends, and some duties outlast it. A recipient must submit all final reports and pay all obligations within 120 days; a subrecipient has 90 days, or an earlier date set by the pass-through entity (2 CFR 200.344(b)–(c)).

• Reconcile the final financial report to the accounting records before you submit it.
• Refund unobligated funds you were paid and are not authorized to keep (200.344(e)).
• Account for property bought with federal funds (200.344(g)).
• Keep the records. Closeout does not end the agency's right to disallow costs after a later audit or review, and audit, property and retention duties continue (2 CFR 200.345).

If a recipient fails to submit final reports, the agency must report the material failure to comply in SAM.gov (200.344(i)). The closeout and record retention guide covers the final steps.

One program as an example

Program rules sit on top of this baseline. A Nonprofit Security Grant Program (NSGP) subrecipient, for example, receives its subaward from a State Administrative Agency, which acts as the pass-through entity and sets the claim, report and approval process. The NSGP post-award roadmap applies these steps to that program.