2 CFR 200.302, explained in plain English

The seven requirements

Paragraph (b) is a list. Translated:

1. Identify every federal award you received and spent

   By award and by program. This is what makes the schedule of expenditures of federal awards possible later.

2. Disclose the financial results of each award accurately, currently and completely

   Accurate, current and complete are the three words. "Current" is the one that bites: reports built from books three months behind do not satisfy it.

3. Keep records that identify the amount, source and expenditure of federal funds

   With source documentation behind them. An entry with no receipt is not a record.

4. Keep effective control over funds, property and assets

   And use them only for authorized purposes. This is where §200.302 hands off to §200.303.

5. Compare expenditures against the budget for each award

   Not once at the end. This is a running comparison, and it is the requirement most often satisfied by accident and least often documented.

6. Written procedures for payment

   Implementing the requirements at §200.305, which covers how you draw and hold federal cash.

7. Written procedures for determining allowable costs

   Under subpart E and your award terms. See §200.403 for what allowable actually means.

The two that are actually work

Written procedures (6 and 7). The regulation does not ask whether you follow a good process. It asks for the document. Two short policies, one on payment and one on allowability, close both items, and "what is your written procedure?" is an early question in any audit.

Budget-to-actual (5). Most accounting packages produce this report. Almost nobody runs it monthly per award and files the result. Doing so is the difference between having a control and being able to show one.

What it does not require

No particular tool. No fund accounting package, no separate bank account per grant, no specific chart of accounts. A spreadsheet-based system can satisfy §200.302 if it does the seven things and the records are real. What it cannot survive is being reconstructed at year end.

The first sentence of paragraph (a) is about States, which use their own laws and procedures. The second sentence is not: it binds every recipient and subrecipient, and it is the one an auditor reaches for when a system technically does all seven things below but still cannot produce the reports the award requires. Read (a), then work through (b).

This is general information, not legal or accounting advice. Federal grant rules change and are applied differently by different agencies and auditors. Check with your auditor, your grant officer, or an attorney before relying on any of it.

The Ember tool for this

Ember Budget

Ember Budget tracks what each program and grant has raised and spent. It keeps restricted funds separate, so the numbers you report tie to the numbers in your books. Unlimited users on every tier.

Sources: 2 CFR Part 200 (eCFR), read 1 September 2026. Federal grant rules change; check the current text before relying on this.