Grant Closeout Procedures: How to Successfully Close Federal Awards

Understanding Grant Closeout

Grant closeout is the process of completing all administrative, financial, and programmatic requirements at the end of a federal award's period of performance. It is not simply a matter of stopping work and filing a final report. Closeout involves a structured sequence of actions with specific deadlines, and failure to complete these steps properly can result in delayed final payments, audit findings, and negative impacts on future funding eligibility.

The Uniform Guidance at 2 CFR 200.344 establishes that the non-federal entity must submit all financial, performance, and other required reports within 120 calendar days after the end date of the period of performance. Federal agencies must complete their closeout actions within one year of receiving the final reports. Understanding these timelines and beginning preparation well before the award end date is essential for a smooth closeout.

Pre-Closeout Planning

Effective closeout begins months before the award end date, not after it. Organizations that wait until the last day of the performance period to begin thinking about closeout invariably encounter problems. A pre-closeout checklist should be initiated at least 90 days before the award end date and should address the following areas:

• Budget review: Analyze remaining balances in each budget category. Identify any unobligated funds and determine whether a no-cost extension is warranted to complete planned activities.
• Expenditure timeline: Ensure all allowable costs are incurred before the end of the performance period. Costs incurred after the end date are not allowable unless specifically authorized.
• Subrecipient closeout: If your award includes subawards, initiate closeout procedures with subrecipients early. Their final invoices and reports must be received in time for you to incorporate them into your own final submissions.
• Equipment inventory: Complete a physical inventory of any equipment purchased with grant funds and begin the disposition process if the equipment is no longer needed.
• Record organization: Begin organizing all grant files, including financial records, programmatic reports, procurement documentation, and correspondence with the funder.

For comprehensive guidance on managing these obligations throughout the award lifecycle, review our guide on post-award grant management and compliance.

Final Financial Reporting

The final SF-425 Federal Financial Report is one of the most critical closeout documents. It must accurately reflect all expenditures charged to the award through the end of the performance period. Common issues that delay final financial reporting include:

• Outstanding obligations: Vendor invoices or subrecipient billings that have not yet been received or processed. You must either liquidate these obligations before the report deadline or report them as unliquidated and work with the agency to resolve them.
• Reconciliation discrepancies: Differences between your general ledger, your drawdown records, and your cumulative financial reports. These must be resolved before the final report can be submitted.
• Cost-sharing documentation: If the award required matching funds, the final report must document that the full match commitment was met.

Understanding how budget categories and cost principles affect your final financial report is essential. Our guide on grant budget fundamentals and federal cost principles provides the foundational knowledge for accurate reporting.

Final Performance Reporting

In addition to the financial report, most federal awards require a final performance or progress report that summarizes the activities conducted and outcomes achieved over the entire project period. This report should demonstrate that the organization accomplished the objectives stated in the approved scope of work and that federal funds were used for their intended purpose.

A strong final performance report connects expenditures to outcomes. It explains what was accomplished, how many people were served, what data was collected, and how the results compare to the targets established in the original application. It should also address any significant deviations from the approved plan, including changes in methodology, timeline, or scope that occurred during the award.

Intellectual Property and Inventions

If the award involved research or development activities, closeout may require submission of an invention disclosure or a final invention statement. Federal agencies track whether grant-funded research produced any patentable inventions, copyrightable works, or other intellectual property. Even if no inventions resulted, the negative certification must typically be filed.

Returning Unobligated Funds

Any federal funds that were drawn down but not expended on allowable costs must be returned to the federal government. This includes unexpended advances and any amounts determined to be unallowable during the closeout review. The process for returning funds varies by agency and payment system, and delays in returning excess funds can result in interest charges.

If your final expenditures are less than the total amount drawn down, work with your agency's payment office to process the refund promptly. If you have incurred allowable costs that exceed your drawdowns, submit a final drawdown request within the allowable timeframe to recover those costs.

Post-Closeout Obligations

Closeout does not end your obligations under the award. Several requirements continue after the award is officially closed:

• Record retention: All financial records, supporting documents, statistical records, and other materials pertinent to the award must be retained for at least three years from the date of submission of the final expenditure report. If any litigation, claim, or audit is pending, records must be retained until the matter is resolved.
• Audit access: The federal government retains the right to disallow costs and recover funds based on a later audit or review for the entire retention period.
• Equipment management: If you retained equipment purchased with grant funds, you must continue to follow federal use and disposition requirements for the life of the equipment.
• Program income: If the grant-funded program continues to generate income after the award closes, the terms of the award may still govern how that income is used.

For information on the application processes that establish many of these closeout obligations from the beginning, see our guide on the federal grant application process.

Common Closeout Mistakes

The most frequent closeout problems organizations encounter include missing the 120-day reporting deadline, failing to liquidate all obligations before the deadline, submitting financial reports that do not reconcile with drawdown records, neglecting to close out subawards before closing the prime award, and losing track of equipment purchased with grant funds. Each of these issues can be prevented with proper planning and a systematic approach to closeout that begins well before the award end date.

Learn more about grant writing strategies at Subthesis.

Complete Your Grant Management Training

Successfully closing a federal award requires the same level of skill and attention as winning one. The Complete Grant Architect course walks you through the entire grant lifecycle, from application through closeout, with practical templates and expert guidance at every stage. Enroll today and develop the comprehensive skills that keep your organization compliant from the first dollar to the final report.