Closing Out a Grant

Grant closeout is the process of finishing a federal award: submitting final financial, performance, and property reports, liquidating every obligation incurred during the period of performance, refunding unspent funds, and settling final indirect cost rates. Deadlines run from the end of the period of performance.

Current figures — verified 2026-08-11

Item	Value	Source
Final reports due, recipient	No later than 120 calendar days after the conclusion of the period of performance	2 CFR 200.344(b)
Final reports due, subrecipient to pass-through entity	No later than 90 calendar days after the conclusion of the subaward period of performance	2 CFR 200.344(b)
Liquidation of financial obligations	120 calendar days for recipients; 90 calendar days for subrecipients	2 CFR 200.344(c)
Federal agency closeout target	Every effort to complete all closeout actions no later than one year after the end of the period of performance	2 CFR 200.344(h)
One-time no-cost extension	Up to 12 months, with written notice and justification at least 10 calendar days before the period of performance ends	2 CFR 200.308(g)(2)
Equipment disposition threshold	Current per-unit fair market value of $10,000 or less may be retained, sold, or disposed of with no further responsibility	2 CFR 200.313(e)(1)
Selling and handling allowance on equipment sale	Up to $1,000 of the federal share of proceeds	2 CFR 200.313(e)(2)
Agency disposition instruction window	120 days, after which the recipient may retain or sell the equipment	2 CFR 200.313(e)(2)
Record retention period	Three years from the date of submission of the final financial report	2 CFR 200.334
Cancellation of fixed-year appropriations	September 30 of the fifth fiscal year after the period of availability ends	31 U.S.C. 1552(a)

These figures change. Verify against the linked source before relying on them. Report an outdated figure

Key takeaways

• Closeout deadlines run from the end of the period of performance.
• Obligations incurred during the award may be liquidated afterward; new ones may not.
• Undrawn funds are deobligated, and eventually canceled to Treasury.
• Failure to close out is reported in SAM.gov as material noncompliance.
• Several closeout steps must start before the award ends.

What is grant closeout?

Grant closeout is the formal determination “that all applicable administrative actions and all required work of the Federal award have been completed,” followed by the settlement actions the regulation requires (2 CFR 200.1). Closeout is a two-sided process with obligations on both the recipient and the awarding agency, and it is the last stage covered under managing the award.

The recipient’s side comprises five actions: submit all required final reports, liquidate all financial obligations incurred under the award, promptly refund any unobligated funds paid and not authorized to be retained, account for all property acquired with federal funds, and submit a revised final financial report once indirect cost rates are finalized where a rate was not final at the time (2 CFR 200.344).

The agency’s side comprises three: make all necessary adjustments to the federal share after closeout reports arrive, including disallowance of costs and deobligation of unliquidated balances; refrain from delaying payments for costs that meet the cost principles; and complete closeout actions within the target shown in the figures above.

One provision defines the balance of power. Where the recipient does not do its part, the agency “must proceed with closeout based on the information available” (2 CFR 200.344(a)). Silence does not delay closeout; it removes the recipient from the calculation. An award closed on the agency’s information is closed at whatever number the agency can support, and the difference is not recoverable later.

When does the period of performance actually end?

The period of performance ends on the end date stated in the award, as amended by any approved extension — and the closeout clocks start from that date, not from the date the last invoice arrives. The period of performance is “the time interval between the start and end date of a Federal award, which may include one or more budget periods” (2 CFR 200.1).

Extensions move the date, and the mechanics matter. Where the award terms authorize it, a recipient may initiate a one-time no-cost extension for the duration shown in the figures above without prior approval, provided it gives the agency written notice with supporting justification and a revised period of performance before the deadline in the figures above.

Prior approval is still required if the terms prohibit the extension, if additional federal funds are needed, or if the scope changes — and the extension “may not be exercised for the sole purpose of using unobligated balances” (2 CFR 200.308(g)(2)). When an extension is approved or initiated, the period of performance is formally amended to end at the completion of the extension (2 CFR 200.309).

What continues past the end date is liquidation, not activity. An obligation is a commitment the recipient has made — a signed purchase order, an executed subaward, an accrued payroll liability — and it must be incurred during the period of performance. An expenditure is the payment of that obligation, and it may occur during the liquidation window. An unliquidated financial obligation is one incurred but not yet paid on a cash-basis report, or incurred without a recorded expenditure on an accrual-basis report (2 CFR 200.1).

The distinction decides what a recipient may still buy. New obligations may not be incurred after the period of performance ends. The narrow exception is administrative closeout costs, which “may be incurred until the due date of the final report(s)” and must be liquidated before that due date and charged to the final budget period (2 CFR 200.403(h)). Ordering equipment in the liquidation window is an unallowable cost, no matter how much budget remains.

What must a recipient submit to close out a grant?

A recipient must submit every report the award requires by the deadline in the figures above, in a package that typically includes a final financial report, a final performance report, property reports where applicable, and invention reporting where the award funded research (2 CFR 200.344(b)).

Five submissions cover most awards:

• Final financial report. The government-wide financial reporting form is the Federal Financial Report, SF-425 (2 CFR 200.328(a)). The line that generates the most trouble is unliquidated obligations: commitments incurred but unpaid are obligations, not unobligated balance, and reporting them in the wrong field misstates both carryover and the amount the agency will deobligate.
• Final performance report. A comparison of accomplishments to the approved objectives, with explanations where goals were not met and analysis of cost overruns. Agencies use OMB-approved forms such as the Research Performance Progress Report or the Performance Progress Report depending on program type.
• Property reports. Where required, the Tangible Personal Property Report family (SF-428, with the Final Award Closeout attachment SF-428-B) and the Real Property Status Report family (SF-429), available through the Grants.gov post-award reporting forms repository.
• Invention reporting. Recipients are subject to government-wide regulations governing patents and inventions at 37 CFR part 401, incorporated by 2 CFR 200.315(c). Disclosure and election deadlines run from events during the award, so a subject invention that was never disclosed cannot be cured at closeout.
• Refund of unobligated balances. Funds paid to the recipient and not authorized to be retained must be refunded promptly (2 CFR 200.344(e)).

The final indirect cost rate is a separate settlement, and one provision protects the recipient. Where a recipient does not have a final rate covering the period of performance, “a final financial report must still be submitted,” followed by a revised final financial report once all applicable rates have been finalized (2 CFR 200.344(b)).

An agency may propose closing at the provisional or last negotiated rate to avoid delay, but “the recipient is not required to agree to a final rate for a Federal award for the purpose of prompt closeout” (2 CFR 200.344(h)). Where a provisional rate was in use and the final rate is higher, agreeing to a fast close means giving up the difference — the underlying mechanics are covered under indirect cost rates and the de minimis option.

What happens to grant funds not drawn down in time?

Funds not drawn down are deobligated by the agency at closeout, and eventually canceled and returned to the Treasury. Deobligation is the removal of unspent budget authority from the award; the money does not remain available to the recipient afterward, and there is no mechanism to reclaim it.

Two clocks run in sequence. The first is the closeout adjustment: after final reports arrive, the agency makes all necessary adjustments to the federal share, “for example, to reflect the disallowance of any costs or the deobligation of an unliquidated balance” (2 CFR 200.344(f)). The second is statutory. Under 31 U.S.C. 1552(a), a fixed appropriation account is closed and “any remaining balance (whether obligated or unobligated) in the account shall be canceled and thereafter shall not be available for obligation or expenditure for any purpose” on the date shown in the figures above. After cancellation, no extension, appeal, or corrected report brings the money back.

Between those two clocks sits the recipient’s own drawdown discipline. Costs incurred during the period of performance and liquidated during the liquidation window are payable, and agencies “must not delay payments to the recipient or subrecipient for costs meeting the requirements of subpart E” (2 CFR 200.344(d)). What causes losses is not agency refusal but recipient timing: a final invoice from a subrecipient that arrives after the liquidation window, or a final drawdown submitted after the payment system has been closed to the award. Cash timing on federal awards is covered further under grant cash flow and reimbursement.

Undrawn balances are also a systemic problem, not a rare one. The Government Accountability Office found approximately $994 million remaining in expired grant accounts in the Payment Management System at the end of fiscal year 2015, a system that at the time handled about 77 percent of all federal civilian grant payments, with more than half of those accounts past their expiration date by one to three years (GAO-16-362).

How is equipment handled at grant closeout?

Equipment acquired under a federal award is accounted for at closeout, and its treatment depends on current per-unit fair market value rather than on original purchase price (2 CFR 200.344(g)). Title vested in the recipient at acquisition, but it is conditional title: “a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled” (2 CFR 200.313(a)).

The residual-value question resolves in three branches (2 CFR 200.313(e)). Equipment at or below the per-unit fair market value in the figures above may be retained, sold, or otherwise disposed of with no further responsibility to the agency. Equipment above that value may be retained or sold, but the agency is entitled to an amount equal to the federal percentage of the original purchase multiplied by the current market value or sale proceeds, less a selling and handling allowance up to the amount in the figures above. Title may also be transferred to the federal government or to an eligible third party, with the recipient compensated for its share.

Timing gives the recipient an out. Where the award terms require disposition instructions and the agency fails to provide them within the window shown in the figures above, the recipient may retain or sell the equipment. Requesting instructions in writing, and dating the request, is what starts that clock.

Two operational rules are tested at closeout even though they applied throughout the award. Property records must carry the full data set — description, serial number, source of funding including the federal award identification number, title holder, acquisition date and cost, percentage of federal participation, location, use and condition, and disposition data. And a physical inventory must have been taken and reconciled to the records at the required interval (2 CFR 200.313(d)). A closeout property report assembled from purchase orders because no inventory was ever taken is the version auditors find.

How long must records be kept after grant closeout?

Records must be kept for the period shown in the figures above, and the clock starts at submission of the final financial report — not at the end of the period of performance, and not at the date the agency closes the award (2 CFR 200.334). A late final report therefore extends the retention obligation by exactly as long as the delay.

Six exceptions modify the baseline, and agencies and pass-through entities may not impose retention requirements beyond them:

• Litigation, claim, or audit. Where any of these starts before the period expires, records are kept until the matter is resolved and final action taken.
• Written notice. The awarding agency, pass-through entity, cognizant agency for audit, oversight agency for audit, or cognizant agency for indirect costs may extend the period in writing.
• Property and equipment. Records run from final disposition of the property rather than from the final financial report.
• Records held by the agency. The retention requirement does not fall on the recipient where records are transferred to or maintained by the federal agency.
• Post-award program income. Where the award required reporting on program income earned after the period of performance, records run from the end of the fiscal year in which the income was earned.
• Indirect cost rate proposals. Where a proposal must be submitted for negotiation, the period starts from the date of submission; where it is not submitted, from the end of the fiscal year the proposal covers.

Single audit records have their own rule. The auditee keeps a copy of the data collection form and the reporting package on file, measured from the date of submission to the Federal Audit Clearinghouse (2 CFR 200.512(f)), which is why a closed award can still be the subject of a finding — the audit mechanics are covered under the Single Audit.

How do you close out a grant?

Closing out a grant is a scheduled sequence, and the schedule runs backward from the end of the period of performance rather than forward from it. Several steps have to start while the award is still open, which is the single most common planning error.

Seven steps, in order:

1. Ninety days before the end date, freeze new obligations and reconcile. Compare budget to actuals by category, confirm which subawards and purchase orders will close cleanly, and identify anything that must be obligated now because it cannot be obligated later.
2. Sixty days before, decide on an extension. A one-time no-cost extension requires written notice with justification and a revised period of performance before the deadline in the figures above, and cannot be used only to spend an unobligated balance (2 CFR 200.308(g)(2)). Any change involving scope or additional funds needs prior approval, covered under prior approval and changing a grant.
3. Thirty days before, notify subrecipients and vendors. Subrecipient final reports and liquidation are due on a shorter clock than the recipient’s own, so the subaward deadline has to be set and communicated well before the prime deadline.
4. At the end date, take physical inventory and request disposition instructions. Inventory reconciled to the property records is the input to the final property report, and a dated written request for disposition instructions starts the agency’s response window.
5. Through the liquidation window, pay obligations and reconcile the ledger. Only obligations incurred during the period of performance, plus allowable administrative closeout costs, may be paid. Reconcile the general ledger to the payment system draw history before preparing the final financial report.
6. Before the reporting deadline, submit the final report set and the final drawdown. Final financial report, final performance report, property and invention reports where applicable, and the refund of any unobligated funds paid and not authorized to be retained.
7. After closeout, file the record set and calendar the retention date. Archive the award file with the final reports, and set a destruction-eligible date computed from the final financial report submission date rather than from the project end date.

Four items must begin before the period of performance ends, and cannot be started afterward: incurring any obligation to be paid with award funds, initiating a no-cost extension, disclosing a subject invention that arose during the award, and setting subrecipient closeout terms — which the pass-through entity is required to include in the subaward from the outset (2 CFR 200.332(b)(6)). Subaward-side duties are covered under subrecipient monitoring and pass-through funding.

This article is general information about federal closeout requirements, not legal, audit, or accounting advice. Specific deadlines and required forms depend on your award terms and your agency’s own regulations.

What goes wrong in grant closeout?

Closeout fails in ways that compound, because an unclosed award blocks the agency’s actions as well as the recipient’s. Agency officials told the Government Accountability Office that closeout delays occur for reasons including “grantee failure to submit final financial and performance reports” and agency failure to review, process, and reconcile that reporting in a timely manner (GAO-16-362).

Six failure modes recur:

• Missing final reports. The most common cause, and the most consequential: where a recipient does not comply, including by failing to submit final reports, the agency “must report the recipient’s material failure to comply with the terms and conditions of the Federal award in SAM.gov” (2 CFR 200.344(i)). That record is visible to every federal agency and every pass-through entity performing risk assessment.
• New obligations in the liquidation window. Spending down a remaining balance after the end date produces unallowable costs, and the pattern is easy for an auditor to see in transaction dates.
• Subrecipient invoices that arrive too late. The subaward clock is shorter than the prime clock for a reason; treating them as the same date leaves the prime recipient holding an unliquidated obligation it cannot report as an expenditure.
• Premature agreement on a provisional indirect rate. Closing at a provisional rate to move the file forward forfeits the difference where the final negotiated rate turns out higher.
• Property reported without an inventory. Disposition treatment turns on current fair market value per unit, which cannot be supported from purchase records alone.
• Retention clocks started from the wrong date. Counting the retention period from the project end date rather than from final financial report submission destroys the evidence before the obligation expires.

The compounding mechanism is mechanical. Until an award is closed, “any undisbursed balance remains in the grant award and cannot be repurposed or canceled and returned to the Department of the Treasury” (GAO-23-105700). The open award keeps a line on the schedule of expenditures of federal awards, keeps period-of-performance and reporting testing in scope for the next single audit, and feeds the risk assessments that determine whether the next award arrives with specific conditions attached.

Federal oversight has documented the pattern for well over a decade: GAO reported about $1 billion in undisbursed funding in expired accounts in the largest civilian grant payment system in 2008 (GAO-08-432), more than $794 million at the end of fiscal year 2011 — including $110.9 million unspent more than five years past the grant end date (GAO-12-360) — and approximately $994 million at the end of fiscal year 2015.

Frequently asked questions

Can a grant still pay an invoice after the end date?

Yes, if the obligation was incurred during the period of performance. Liquidation of existing obligations continues through the window shown in the figures above. What is not permitted is incurring a new obligation after the end date, apart from allowable administrative closeout costs, which must themselves be liquidated by the final report due date.

What is the difference between an unobligated balance and an unliquidated obligation?

An unobligated balance is award authority the recipient never committed. An unliquidated obligation is a commitment already made but not yet paid. Reporting an unliquidated obligation as unobligated balance overstates the amount available for deobligation and misstates the final financial report.

Does a no-cost extension delay closeout deadlines?

Yes, because it amends the period of performance itself. Closeout clocks run from the amended end date. The extension has to be initiated or approved before the original end date, with written notice and justification, and cannot be used solely to spend down an unobligated balance.

What happens if the final indirect cost rate is not settled?

The final financial report is still due on time using the best available rate, followed by a revised final financial report once the rates are finalized. An agency may propose closing at the provisional or last negotiated rate, but the recipient is not required to agree to a final rate for the purpose of prompt closeout.

Who closes out the subaward?

The pass-through entity, using closeout terms it was required to include in the subaward at issuance. Subrecipient final reports and liquidation are due on a shorter clock than the prime recipient’s, so the prime has time to incorporate subrecipient figures into its own final financial report.

What happens if a recipient simply does not close out?

The agency proceeds with closeout based on the information available, and reports the material failure to comply in SAM.gov. Costs the recipient could have supported are lost, unspent funds are deobligated, and the noncompliance record follows the organization into future federal and pass-through risk assessments.

Related topics

• Managing the Award — the hub for post-award compliance, reporting, and closeout
• Grant Reporting Requirements
• Time and Effort Documentation
• Grant Termination, Suspension, and Appeals
• How to Read a Notice of Award

Sources

1. Electronic Code of Federal Regulations, 2 CFR 200.344, “Closeout.” https://www.ecfr.gov/current/title-2/section-200.344 (accessed 2026-08-11)
2. Electronic Code of Federal Regulations, 2 CFR 200.1, “Definitions” (Closeout; Period of performance; Unliquidated financial obligation; Unobligated balance). https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-A/section-200.1 (accessed 2026-08-11)
3. Electronic Code of Federal Regulations, 2 CFR 200.308, “Revision of budget and program plans.” https://www.ecfr.gov/current/title-2/section-200.308 (accessed 2026-08-11)
4. Electronic Code of Federal Regulations, 2 CFR 200.309, “Modifications to Period of Performance.” https://www.ecfr.gov/current/title-2/section-200.309 (accessed 2026-08-11)
5. Electronic Code of Federal Regulations, 2 CFR 200.313, “Equipment.” https://www.ecfr.gov/current/title-2/section-200.313 (accessed 2026-08-11)
6. Electronic Code of Federal Regulations, 2 CFR 200.315, “Intangible property.” https://www.ecfr.gov/current/title-2/section-200.315 (accessed 2026-08-11)
7. Electronic Code of Federal Regulations, 2 CFR 200.328, “Financial reporting.” https://www.ecfr.gov/current/title-2/section-200.328 (accessed 2026-08-11)
8. Electronic Code of Federal Regulations, 2 CFR 200.332, “Requirements for pass-through entities.” https://www.ecfr.gov/current/title-2/section-200.332 (accessed 2026-08-11)
9. Electronic Code of Federal Regulations, 2 CFR 200.334, “Record retention requirements.” https://www.ecfr.gov/current/title-2/section-200.334 (accessed 2026-08-11)
10. Electronic Code of Federal Regulations, 2 CFR 200.403, “Factors affecting allowability of costs.” https://www.ecfr.gov/current/title-2/section-200.403 (accessed 2026-08-11)
11. Electronic Code of Federal Regulations, 2 CFR 200.512, “Report submission.” https://www.ecfr.gov/current/title-2/section-200.512 (accessed 2026-08-11)
12. Electronic Code of Federal Regulations, 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms.” https://www.ecfr.gov/current/title-37/part-401 (accessed 2026-08-11)
13. United States Code, 31 U.S.C. 1552, “Procedure for appropriation accounts available for definite periods.” https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section1552&num=0&edition=prelim (accessed 2026-08-11)
14. U.S. Government Accountability Office, “Grants Management: Actions Needed to Address Persistent Grant Closeout Timeliness and Undisbursed Balance Issues,” GAO-16-362, April 14, 2016. https://www.gao.gov/products/gao-16-362 (accessed 2026-08-11)
15. U.S. Government Accountability Office, “Grants Management: Action Needed to Improve the Timeliness of Grant Closeouts by Federal Agencies,” GAO-12-360, April 2012. https://www.gao.gov/products/gao-12-360 (accessed 2026-08-11)
16. U.S. Government Accountability Office, “Grants Management: Actions Needed to Improve Agency Reporting of Expired Grants,” GAO-23-105700, April 13, 2023. https://www.gao.gov/products/gao-23-105700 (accessed 2026-08-11)
17. U.S. Government Accountability Office, “Grants Management: Attention Needed to Address Undisbursed Balances in Expired Grant Accounts,” GAO-08-432, August 2008. https://www.gao.gov/products/gao-08-432 (accessed 2026-08-11)
18. Grants.gov, Post-Award Reporting Forms repository (SF-425, SF-428, SF-429, SF-PPR). https://grants.gov/forms/forms-repository/post-award-reporting-forms (accessed 2026-08-11)