The Grant Is Over, Your Obligations Are Not

HiQuity Solutions
May 10
5 min read

Updated: 6 days ago

POST 8 of 10

Series - Grant Ready: A Compliance Readiness Framework for Federal Award Recipients

Introduction

The last day of a federal award's period of performance feels like a finish line; the program ran, the funds were spent, the work got done. For most organizations, attention moves immediately to the next proposal and the next award or cycle.

Federal agencies operate on a different timeline, however. The end of the period of performance is the beginning of closeout, a defined phase of the grant lifecycle with its own regulatory requirements, deadlines, and consequences when those deadlines are missed. The consequences aren't simply administrative inconveniences; they can follow organizations into their next award cycle, show up in their federal performance records, and in some cases require repayment of funds already spent.

Closeout is the phase most organizations prepare for least, and it is also, consistently, one of the most audited.

HHS Grantee Note: The regulatory citations throughout this series reflect 2 CFR Part 200, which fully replaced 45 CFR Part 75 as the governing framework for HHS awards effective October 1, 2025. If your organization's compliance policies still reference Part 75, see early posts of this series for what changed and what your organization needs to do.

What Closeout Actually Requires

Under 2 CFR § 200.344, recipients must complete several specific actions within 120 calendar days after the end of the period of performance. For subrecipients, the window is shorter, only 90 calendar days after the end of the subaward period, or earlier if the subaward agreement specifies a tighter timeline.

Within that window, three things must happen:

All required reports must be submitted. Final financial reports, final performance reports, and any other reports specified in the terms and conditions of the award are due no later than 120 days after the period of performance ends. This includes the Federal Financial Report (FFR), which must reflect actual final expenditures, not estimates and not figures pending reconciliation. A final FFR that includes unliquidated obligations is not a valid final FFR.

All financial obligations must be liquidated. Liquidation means that every obligation incurred during the award period, including every invoice, payroll entry, and contracted cost, has been paid and recorded in the organization's financial system. Obligations incurred during the period of performance but not yet paid at closeout must be paid from available award funds within the 120-day window. Obligations that cannot be liquidated within that window require the organization to contact the federal agency and request an extension before the deadline passes and not after.

Unobligated funds must be returned. Any advance payments received from the federal agency that were not spent on allowable award costs must be promptly refunded. Organizations that draw down more than they spent are responsible for identifying that balance and initiating the return without waiting to be asked.

What Happens When These Steps Are Missed

Missing closeout deadlines is not simply a paperwork problem: under 2 CFR § 200.344, if a recipient fails to submit required final reports within the 120-day window, the federal agency must report that failure in SAM.gov, the same system used to verify organizational eligibility for future federal awards. A negative performance record in SAM.gov follows an organization into every subsequent application and can affect award decisions, risk classifications, and the terms imposed on future grants.

Federal agencies are also authorized to proceed with closeout using whatever information is available if the recipient has not submitted required reports within one year of the period of performance end date. A closeout conducted on incomplete information is not in the organization's interest and may result in disallowed costs, inaccurate final financial records, or recovery of funds the organization believed had been properly drawn down.

Post-closeout obligations extend further still: under 2 CFR § 200.345, even after a federal award is formally closed, recipients remain obligated to return funds identified through later refunds, corrections, or audit findings. The federal government retains the right to recover amounts based on audit results covering any part of the award period, regardless of whether the award has been formally closed. Closeout ends the active management phase of the award but does not end the organization's financial exposure.

Equipment and Supplies: An Often-Overlooked Closeout Requirement

Organizations that purchased equipment or supplies with federal award funds carry additional closeout obligations that are frequently overlooked until an auditor raises them.

Under 2 CFR § 200.313, equipment purchased with federal funds, defined as tangible property with a useful life of more than one year and a per-unit acquisition cost of $10,000 or more under the 2024 revised threshold, requires disposition instructions from the federal agency at the end of the award.

The organization cannot simply retain, sell, or dispose of federally funded equipment without first determining what the agency requires. Options vary by agency and award, and the organization may be permitted to retain the equipment for continued use on other federal programs, required to transfer it to the agency, or authorized to sell it and remit the federal share of the proceeds.

Supplies are handled differently: under 2 CFR § 200.314, if unused supplies purchased with federal funds have a residual value exceeding $10,000 in aggregate at the end of the award period, the organization must compensate the federal agency for its proportional interest in those supplies. Organizations that close out awards without addressing equipment and supply disposition are leaving an open compliance issue behind them, one that can resurface during a subsequent audit or program review.

Record Retention: The Obligation That Outlasts Everything Else

Federal award records must be retained for three years from the date of submission of the final expenditure report, under 2 CFR § 200.334, a retention period that applies to all financial records, supporting documentation, statistical records, and other records relevant to the award.

Three years is a minimum requirement: if any litigation, claim, or audit is initiated before the three-year period expires, records must be retained until the matter is fully resolved regardless of how long that takes. Organizations that destroy records on the three-year anniversary of closeout without first confirming there are no open audit findings or pending claims are taking a compliance risk that can be difficult to recover from.

Planning for Closeout Before the Award Ends

The most common closeout failures are not caused by organizational negligence at the end of an award but by decisions made throughout the award period: costs posted late, financial records not reconciled regularly, equipment purchases not inventoried, and indirect cost calculations not monitored. These leave organizations scrambling to produce accurate final reports under deadline pressure.

Organizations that build closeout discipline into their award management from day one are the ones that close cleanly. This includes reconciling financial records on a regular schedule throughout the award period, tracking equipment purchases against the threshold as they occur, monitoring indirect cost charges against the approved rate so that final reconciliation is not a surprise, and building the 120-day closeout window into program planning so that staff capacity is available when final reports are due.

The proposal you are writing this spring, if funded, will eventually need to be closed out, and how cleanly that happens depends less on what you do in month 36 than on the habits you build in months one through 35.

Heading into closeout on a current award, or building systems for the one arriving this fall? HiQuity Solutions works with organizations at every phase of the grant lifecycle, including the phase most people forget to plan for.

Schedule a No-Cost Consultation

References

[1] 2 C.F.R. § 200.344. Closeout. OMB Uniform Guidance, as revised October 1, 2024. https://www.ecfr.gov/current/title-2/part-200/subpart-D/subject-group-ECFRbceb211a19344ce/section-200.344

[2] U.S. Department of Labor, Veterans' Employment and Training Service. "Grant Closeout Frequently Asked Questions." https://www.dol.gov/sites/dolgov/files/VETS/files/Closeout-FAQs.pdf

[3] 2 C.F.R. § 200.345. Post-Closeout Adjustments and Continuing Responsibilities. OMB Uniform Guidance, as revised October 1, 2024. https://www.ecfr.gov/current/title-2/part-200/subpart-D/subject-group-ECFRbceb211a19344ce/section-200.345

[4] 2 C.F.R. §§ 200.313–200.314. Equipment and Supplies. OMB Uniform Guidance, as revised October 1, 2024 (equipment threshold updated from $5,000 to $10,000). https://www.ecfr.gov/current/title-2/part-200/subpart-D

[5] 2 C.F.R. § 200.334. Retention Requirements for Records. OMB Uniform Guidance, as revised October 1, 2024. https://www.ecfr.gov/current/title-2/part-200/subpart-D