Insights
Federal Grant Compliance: What to Do From Award to Closeout
Federal grant compliance means doing what your award and 2 CFR 200 require at each stage: setting up the award, charging costs correctly, getting approval for certain changes, reporting on time, and closing out. The table below lists each step in order, with the rule behind it and our guide to it.
| Stage | What to do | Rule | Our guide |
|---|---|---|---|
| When you apply | Check whether the funder lets you charge grant writing or grant management to the award | 2 CFR 200.460, 2 CFR 200.459 | Paying a grant writer |
| Before you accept | Read the notice of award and its terms, and find out whether it is a grant or a cooperative agreement | 2 CFR 200.211 | Grant vs cooperative agreement |
| Before you accept | Check the reporting, cost share, and prior approval terms the notice of funding opportunity said would apply | 2 CFR 200.211 | Reading a NOFO |
| First 30 days | Set up the award in your accounting system so every cost can be traced to it | 2 CFR 200.302 | |
| First 30 days | Keep SAM.gov active and update it every year | 2 CFR 25.200 | SAM.gov registration |
| First 30 days | Decide whether each partner is a subrecipient or a contractor, and assess each subrecipient’s risk | 2 CFR 200.331, 2 CFR 200.332 | Subrecipient vs contractor |
| Every pay period | Charge salaries from records of the work people actually did | 2 CFR 200.430(g) | Time and effort |
| Every purchase | Follow your written procurement procedures | 2 CFR 200.318 | Current thresholds |
| Every month | Charge indirect costs at your negotiated rate or the de minimis rate, on the right base | 2 CFR 200.414 | Indirect cost rates |
| When plans change | Ask for prior approval before changes that need it, such as a change in scope or key personnel | 2 CFR 200.308 | Budget revisions |
| Each reporting period | Submit financial and performance reports on the schedule in the award | 2 CFR 200.328, 2 CFR 200.329 | |
| Each fiscal year | Total your federal spending to see whether you need a Single Audit | 2 CFR 200.501 | Single Audit |
| After the award ends | Submit final reports, pay final costs, and keep the records | 2 CFR 200.344, 2 CFR 200.334 | Closeout |
What does federal grant compliance mean?
When you accept a federal award, you agree to follow its terms and the rules they bring in. For most nonprofits, local governments, and tribes, those rules are in the Uniform Guidance, 2 CFR 200. The notice of award tells you which parts apply and adds the agency’s own conditions (2 CFR 200.211).
The rules fall into four groups. You need systems that track the money. You need to follow those systems every time you spend. You need to report on time. And you need to close the award out and keep the records. In our experience, most audit findings come from a gap in one of these, not from fraud. The usual causes are a salary charged from the budget instead of from time records, a purchase made without the written procedure, or a report filed late.
What should I do when a federal award arrives?
Read the whole notice of award before you sign or draw funds. Note the period of performance, the reporting dates, any cost share, any special conditions, and the name of your grants officer. Find out whether the award is a grant or a cooperative agreement. Under a cooperative agreement, the agency stays involved in the work and may need to sign off on more decisions. Our post on grants, cooperative agreements, and contracts explains the difference.
Then set the award up in your accounting system. Your financial system has to identify every federal award you receive and spend, with its Assistance Listing number and award number (2 CFR 200.302(b)(1)). In practice, that means a separate fund, grant, or project code for each award from day one. Add every due date to a shared calendar that more than one person can see.
Keep your SAM.gov registration active for as long as you have an open award, and update it every year (2 CFR 25.200(b)). A lapsed registration can hold up payments, and our SAM.gov guide explains how to renew on time.
What policies does the Uniform Guidance require?
You need internal controls that give reasonable assurance you are managing the award by its terms (2 CFR 200.303(a)). Auditors look for these written policies and test whether you follow them:
- Financial management. How you record, approve, and allocate costs (2 CFR 200.302).
- Procurement. Documented procedures for buying goods and services with federal funds (2 CFR 200.318(a)). Your procedure sets your micro-purchase threshold, and our thresholds table lists the current federal figures.
- Time and effort. Salary charges must be based on records that accurately reflect the work performed (2 CFR 200.430(g)(1)). Our time and effort guide shows what that looks like.
- Equipment and capitalization. Equipment is property costing at least the lesser of your capitalization level or $10,000 per unit (2 CFR 200.1).
- Subrecipient monitoring, if you pass funds to partners (2 CFR 200.332).
Your own policies count as much as the regulation. If your policy says two quotes for purchases over a set amount, the auditor will check for two quotes.
Can I change the budget on a federal grant?
Often, yes. Many budget changes don’t need permission. A specific list does, including any change in the scope or objectives and a change in key personnel identified by name or position in the award (2 CFR 200.308(f)). If the federal share is over the simplified acquisition threshold, the agency can also restrict transfers among budget categories that add up to more than 10 percent of the total approved budget, including cost share (2 CFR 200.308(i)). Your notice of award will say if it does. Our post on budget revisions and prior approval walks through each case.
How do I manage subrecipients on a federal award?
First decide whether each partner is a subrecipient or a contractor. A subrecipient carries out part of your program, and a contractor sells you goods or services. You decide based on the relationship, not the label in the agreement (2 CFR 200.331). For each subrecipient, you have to evaluate its risk of noncompliance and set your monitoring to match (2 CFR 200.332(c)). Our post on subrecipients and contractors covers the test and what you owe each one.
How are indirect costs charged to a federal grant?
You charge indirect costs at your negotiated rate. If you have no current negotiated rate, you can use a de minimis rate of up to 15 percent of modified total direct costs (2 CFR 200.414(f)). That base counts only the first $50,000 of each subaward (2 CFR 200.1). The base matters as much as the rate. Our guide to the de minimis rate vs a negotiated rate shows when each one makes sense.
When are federal grant reports due?
Your award sets the schedule. The Uniform Guidance sets the limits around it:
| Report | How often | When it is due | Rule |
|---|---|---|---|
| Financial report (usually the SF-425) | Set by the award: at least once a year, and no more than quarterly | 30 days after a quarterly or semiannual period; 90 days after an annual one | 2 CFR 200.328 |
| Performance report | Set by the award: at least once a year, and no more than quarterly | 30 days after a quarterly or semiannual period; 90 days after an annual one | 2 CFR 200.329 |
| Final financial and performance reports | Once | 120 days after the period of performance ends (90 days for a subrecipient, unless the pass-through entity sets an earlier date) | 2 CFR 200.344(b) |
| Single Audit reporting package | Each year you spend $1,000,000 or more in federal awards | 30 days after you receive the auditor’s report, or nine months after year end, whichever is earlier | 2 CFR 200.512(a) |
Late reports are one of the easiest findings to avoid. Put every date on the shared calendar when the award arrives, with a reminder two weeks ahead.
When do I need a Single Audit?
You need one for any fiscal year in which you spend $1,000,000 or more in federal awards (2 CFR 200.501(a)). That includes federal money passed through a state or county. Besides your financial statements, the auditor tests whether you followed the award terms. Our Single Audit guide covers what counts toward the threshold and what to have ready.
How do I close out a federal award?
You have 120 calendar days after the period of performance ends to submit all final reports and pay every obligation from the award (2 CFR 200.344(b)). Subrecipients usually have 90 days, so the pass-through entity can meet its own deadline. Keep the records for three years from the date you submit the final financial report (2 CFR 200.334). Our closeout guide covers leftover funds and equipment.
What should I do if something goes wrong?
Most problems, such as a missed report or a cost charged to the wrong award, can be fixed. Correct the records, tell your grants officer in writing, and keep the reply. Some problems must be reported. If you have credible evidence of a federal crime involving fraud, conflict of interest, bribery, or gratuities connected to the award, or of a civil False Claims Act violation, you must promptly disclose it in writing to the agency, its Office of Inspector General, and any pass-through entity (2 CFR 200.113).
Are the Uniform Guidance rules changing?
Possibly. In May 2026, OMB proposed a broad revision of 2 CFR 200 (91 FR 32198). When we checked the Federal Register on October 26, 2026, no final rule had been published, so the current rules still apply. We’ll update this guide and the posts it links to if a final rule comes out.
How can I check whether we’re compliant now?
Pick one active award and test it against the table at the top of this page. Can you show the notice of award, a time record behind each salary charge, a procurement file for each purchase, and proof that each report went in on time? If any answer is no, start there.
Frequently asked questions
What is the Uniform Guidance?
The Uniform Guidance is 2 CFR 200, the federal rules for managing grants and cooperative agreements. It covers administrative requirements, cost principles, and audit requirements. Your notice of award says which parts apply.
Who has to follow 2 CFR 200?
Nonprofits, states, local governments, tribes, and institutions of higher education that receive federal grants or cooperative agreements, either directly or through a pass-through entity. The award terms say which rules apply to your award.
How long do I have to keep federal grant records?
Three years from the date you submit the final financial report. It runs longer if litigation, a claim, or an audit starts before then, or if the agency tells you in writing to keep records longer (2 CFR 200.334).
How often are federal financial reports due?
The award sets the schedule. It can be no more often than quarterly and no less than once a year. Quarterly and semiannual reports are due 30 days after the period, and annual reports 90 days after (2 CFR 200.328).
What happens if we don't comply with a federal award?
The agency can disallow costs, add specific conditions, withhold payments, or in serious cases suspend or end the award. Most problems are fixed by correcting the records and telling the grants officer in writing.
This article is general information. It is not legal, tax, or accounting advice.
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