Grant Closeout Requirements & Procedures

What Is Grant Closeout?

Closeout is the process by which the federal awarding agency or pass-through entity determines that all applicable administrative actions and required work under the federal award have been completed. It is not simply the end of the period of performance — it is a structured process with specific deadlines, required reports, and continuing obligations that extend beyond the final day of the award.

Many organizations treat closeout as an afterthought, scrambling to submit final reports after key staff have moved on and financial records have been archived. This approach invites errors, missed deadlines, and potential compliance findings. Closeout should begin as a deliberate process at least 90 days before the end of the period of performance, with a clear timeline, assigned responsibilities, and systematic documentation.

The 120-Day Closeout Timeline (§200.344)

The non-federal entity must submit all financial, performance, and other required reports within 120 calendar days after the end of the period of performance. This is the maximum window — individual award terms may specify shorter deadlines for specific reports.

The 120-day clock starts on the last day of the period of performance, not the date the organization stops spending. During this window, the organization must:

• Liquidate all financial obligations incurred during the period of performance
• Submit the final SF-425 Federal Financial Report
• Submit the final performance report
• Account for all property acquired with federal funds
• Return any unobligated balances to the federal agency

It is critical to understand the distinction between obligations and expenditures during closeout. You may only liquidate obligations that were incurred during the period of performance. You cannot create new obligations after the period of performance ends, even if you are within the 120-day closeout window. The closeout period is for paying bills already incurred, not for starting new activities.

Final Reporting Requirements

Final Financial Report (SF-425)

The final SF-425 must report all cumulative expenditures from the beginning of the award through the end of the period of performance, including any costs liquidated during the 120-day closeout period. This report must reconcile with all prior interim SF-425 reports and with the organization's accounting records. Common errors on the final SF-425 include:

• Reporting obligations as expenditures before they are actually liquidated
• Failing to include indirect costs for the final reporting period
• Not accounting for program income earned during the final period
• Including costs incurred after the end of the period of performance

Final Performance Report

The final performance report summarizes the accomplishments of the entire award period, comparing actual outcomes to the approved objectives and milestones. It should describe the impact of the project, lessons learned, and any deliverables produced. Federal agencies use final performance reports to assess program effectiveness and inform future funding decisions — a thorough, well-documented final report can influence renewal decisions.

Final Property Report

If the organization acquired equipment or real property with federal funds, a final property accounting is required. This includes the current inventory of all equipment purchased with award funds, the condition and location of each item, and the organization's plan for disposition of equipment with a current fair market value exceeding $5,000. For real property, the organization must request disposition instructions from the federal agency.

Final Inventory of Unused Supplies

If the organization has a residual inventory of unused supplies exceeding $5,000 in total aggregate value at closeout, it must either compensate the federal agency for its share or use the supplies for allowable purposes under other federal awards. For healthcare organizations with significant supply inventories (medical supplies, lab supplies, PPE), this can be a material closeout consideration.

Return of Unobligated Balances

Any federal funds that were not obligated before the end of the period of performance must be returned to the federal agency. If the organization received advance payments, the unobligated balance must be returned within 120 days. Interest on federal funds held in excess of the amount needed must also be remitted (minus the $500 annual retention allowance for non-federal entities).

Organizations should plan expenditures carefully to minimize unobligated balances at closeout. Large unobligated balances may signal to the awarding agency that the organization did not need the full award amount, which can affect future funding levels. However, never incur unnecessary costs just to spend down a balance — that would violate the cost principles of Subpart E.

Continuing Responsibilities After Closeout (§200.345)

Closeout does not end the organization's relationship with the federal award. Section §200.345 specifies that closeout does not affect:

• Audit requirements — the organization remains subject to audit requirements for the period the award was active. If your fiscal year includes expenditures from a closed award, those expenditures must still be included in the Single Audit
• Property obligations — the federal interest in equipment and real property continues after closeout until the property is properly disposed of
• Record retention — records must be retained for three years from the date of submission of the final expenditure report, and longer if litigation, audit, or claims are pending
• Disallowed cost recovery — the federal agency may recover costs disallowed through audit or review even after the award is officially closed out
• Program income — the requirements for program income may continue to apply after closeout, depending on the award terms

Closeout vs. Termination vs. Suspension

These three concepts are related but legally distinct. Understanding the differences is important because each carries different implications for the organization.

Closeout Checklist for Grants Managers

A structured closeout process prevents missed deadlines and compliance gaps. Begin this process at least 90 days before the end of the period of performance.

90 Days Before End of Performance Period

• Determine whether a no-cost extension is needed and request it if required
• Review the award terms for any closeout-specific requirements beyond the standard 2 CFR 200 provisions
• Assess the budget to identify any remaining obligations that need to be incurred before the end date
• Notify subrecipients of the upcoming end date and their closeout obligations

30 Days Before End of Performance Period

• Stop incurring new obligations unless they will be fully liquidated by the end date
• Begin compiling data for the final performance report
• Complete a physical inventory of all equipment purchased with award funds
• Assess the inventory of unused supplies

0–120 Days After End of Performance Period

• Liquidate all remaining obligations (pay outstanding invoices, finalize subrecipient payments)
• Submit the final SF-425, reconciled to the general ledger
• Submit the final performance report
• Submit the final property report (if applicable)
• Return any unobligated balances to the federal agency
• Ensure all award records are organized for the three-year retention period
• Retain proof of submission for all final reports

Adjustments and Disallowed Costs After Closeout

Even after an award is officially closed out, the federal agency retains the right to recover funds if subsequent audits or reviews reveal disallowed costs. The most common scenarios include Single Audit findings that identify questioned costs from the final award period, OIG investigations that uncover noncompliance, and resolution of disputed indirect cost rate adjustments.

Organizations should not assume that a clean closeout means they are free from future financial exposure. Maintaining organized records and accurate documentation throughout the award period is the best protection against post-closeout recoveries.

Closeout is the final chapter in the lifecycle of a federal award. For guidance on the requirements that apply during the award period, see our chapters on financial management, reporting, and property management.