2 CFR 200.313: Inventory Every 2 Years, Records, Disposal

Full answer: 2 CFR 200.313(d)(2) requires a physical inventory of federally funded equipment at least once every 2 years, reconciled to property records. Each record lists the description, serial number, FAIN, title holder, acquisition date, cost, federal share, location, use, and condition. Missing the inventory can become an audit finding even when there are no questioned costs.

This page is for: grant managers, finance directors, research administrators, program directors, and auditors deciding how to buy, tag, inventory, insure, share, close out, or dispose of federally funded equipment.

According to 2 CFR 200.313, the compliance job continues until disposition, not only until purchase. Grantsights' view: the common mistake is assigning budget approval to one person and asset control to no one. That gap creates the audit problem later, especially when equipment moves, the grant closes, or the fair market value stays above the federal share threshold. Pair this page with the federal grant closeout checklist when the award is ending.

2 CFR 200.313 Physical Inventory and Equipment Management Guide

Data note: Regulatory thresholds, property-record requirements, use rules, inventory rules, closeout controls, and disposition steps were checked July 26, 2026 against 2 CFR Part 200 and the 2024 Uniform Guidance update. Verify award-specific terms before purchase or disposition.

Equipment purchases represent some of the largest single expenditures on federal grants. A mass spectrometer, an MRI scanner, a CNC machine, or even a fleet of field vehicles can easily run into six or seven figures. And unlike consumable supplies, equipment sticks around long after the grant ends, creating ongoing management obligations that catch many organizations off guard.

The rules for managing federally funded equipment live in 2 CFR 200.313, and they cover everything from what qualifies as equipment to what happens when you're done with it. This guide walks through every requirement, including the significant threshold change that took effect in October 2024.

Last updated: July 26, 2026

June 28, 2026 Physical Inventory Audit Signal

It is the exact physical-inventory failure pattern under 2 CFR 200.313(d).

In the DOT OIG June 30, 2025 single-audit summary, the City of Scottsboro, Alabama appears under FAA Airport Improvement Program equipment and real property management. The OIG summary reports a fiscal year 2024 finding because the city did not perform the physical inventory required by Uniform Guidance section 200.313(d). The auditor recommendation was to create policies and procedures that make sure federally funded equipment is inventoried at least every 2 years.

That example shows the practical rule: an equipment file is not ready just because the purchase order, invoice, and asset tag exist. The audit file needs the inventory date, count evidence, reconciliation to property records, review signoff, and a corrective-action owner for missing or moved items.

June 18, 2026 Equipment Lifecycle Source Check

2 CFR 200.313 still controls equipment use, property records, physical inventory at least every 2 years, insurance, safeguards, and disposition. 2 CFR 200.1 still makes computing devices supplies when they are below the lesser of the recipient's capitalization level or $10,000. 2 CFR 200.344 still makes property accounting part of closeout.

Use this order before buying or disposing of federally funded equipment:

Grantsights pattern: the audit finding usually starts before the audit. The risky point is buying the asset without assigning the person who will update location, condition, federal share, and disposition records after the invoice is paid.

June 2026 Source Review by Grantsights

Editorial accountability: Source review by Grantsights rechecked the live Uniform Guidance, 2024 Federal Register update, agency property terms, closeout rules, and equipment-heavy award patterns in the Grantsights database. According to 2 CFR 200.313, federally funded equipment requires property records, physical inventory at least every 2 years, and disposition controls. According to 2 CFR 200.1, equipment is tangible personal property with a useful life of more than 1 year and a per-unit acquisition cost at or above the threshold. According to the 2024 Federal Register update, the federal threshold increased to $10,000. According to 2 CFR 200.344, property accounting is part of closeout.

Based on our analysis of equipment-heavy grant pages, the bad fit is a recipient that treats equipment as a budget approval only. For example, one lab can buy a $12,000 centrifuge correctly and still fail later if the serial number, federal participation share, condition, and location are not in the property record.

Decision checklist:

What Official Sources Don't Tell You

Official sources define equipment, but they do not tell you when the tracking burden outweighs the benefit of buying under one award. The practical gap is lifecycle cost: high-value assets need budget approval, property-control setup, inventory discipline, insurance, closeout review, and possible federal share repayment. Use the grant database to find equipment-friendly grants by agency, and read each program's page for its equipment terms.

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The $10,000 Equipment Threshold: What Changed in 2024

Equipment is tangible personal property with a useful life of more than one year and a per-unit acquisition cost at or above the lesser of the recipient's capitalization level for financial-statement purposes or $10,000. OMB raised the federal ceiling from $5,000 to $10,000 in the 2024 revision.

OMB finalized this change as part of the 2024 revisions to the Uniform Guidance, effective for awards issued on or after October 1, 2024. According to the OMB guidance published in the Federal Register, the increase reflects inflation and reduces administrative burden by reclassifying lower-cost items as supplies.

Here's what this means in practice:

Important: A recipient's lower capitalization level can make an item equipment even when its cost is below $10,000. Confirm the agency's implementation and the award terms before applying the 2024 revision to an older award.

Equipment vs. Supplies: Why the Distinction Matters

The equipment vs. supplies classification affects far more than just property tracking:

• Equipment requires prior approval from the federal agency (unless included in the approved budget), detailed property records, physical inventory, and federal disposition rules
• Supplies do not require the individual equipment records and inventory process, but 2 CFR 200.314 and award terms can still control residual supplies and disposition

This means the threshold increase significantly reduced the tracking burden for items in the $5,000 to $9,999 range. A $7,000 laptop that previously required a property tag, inventory tracking, and disposition approval now just gets expensed as a supply.

For guidance on how equipment fits into your overall grant budget, see our federal grant budget categories guide.

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Property Records Requirements: What You Must Track

Under 2 CFR 200.313(d)(1), your property records for each piece of grant-funded equipment must include all of the following:

1. Description of the property - What it is (e.g., "Thermo Fisher Q Exactive HF-X Mass Spectrometer")
2. Serial number or other identification number - Including your internal asset tag number
3. Source of funding - Including the Federal Award Identification Number (FAIN) for the grant that paid for it
4. Title holder - Whether the grantee or the federal government holds title
5. Acquisition date - When you received or purchased the equipment
6. Cost of the property - The total acquisition cost, including shipping and installation if capitalized
7. Percentage of federal participation - What percentage of the cost was paid with federal funds (important for shared-funded equipment)
8. Location, use, and condition - Where the equipment is physically located and its current status
9. Ultimate disposition data - Including the date of disposal and sale price, when applicable

This isn't optional or aspirational. Auditors will pull your equipment records and compare them against purchase orders, accounting records, and physical inventory results. Missing or incomplete records are among the most common equipment-related audit findings.

Maintaining Accurate Records Over Time

Equipment records aren't a one-time setup. You need to update them whenever:

• Equipment is moved to a different location
• Equipment is loaned to another department or institution
• Condition changes (e.g., equipment breaks down and is repaired)
• Equipment is taken out of service
• Title transfers between entities

Many institutions use asset management systems (like Oracle Fixed Assets, SAP Asset Accounting, or specialized research equipment databases) to maintain these records. If you're tracking equipment on spreadsheets, you're creating risk. Spreadsheets lack audit trails, version control, and the automated alerts that purpose-built systems provide.

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Physical Inventory Requirements: Every Two Years

Under 2 CFR 200.313(d)(2), you must conduct a physical inventory of federally funded equipment and reconcile the results with your property records at least once every two years.

What a Compliant Physical Inventory Looks Like

A physical inventory means someone physically goes to the recorded location of each piece of equipment and confirms:

• The equipment exists - It's physically present where the records say it should be
• It matches the records - Serial number, description, and asset tag match what's in the system
• Its condition is documented - Is it in good working order, in need of repair, or obsolete?
• It's being used appropriately - Is it being used for the grant purpose or an approved alternative use?

The inventory should be conducted by someone other than the person responsible for the equipment (separation of duties), and results must be documented. Any discrepancies between records and physical findings need to be investigated and resolved.

Common Inventory Problems

These are the issues that surface most frequently during physical inventories:

• Equipment can't be located. It was moved and no one updated the records, or it was transferred to another department informally.
• Serial numbers don't match. The wrong serial number was recorded at acquisition, or equipment was swapped out.
• Equipment is at an off-site location. Field equipment, equipment loaned to collaborators, or items in storage facilities that weren't included in the inventory.
• Condition has deteriorated. Equipment that's broken, obsolete, or cannibalized for parts but still showing as "active" in the records.

Any loss, damage, or theft discovered during inventory must be investigated under 2 CFR 200.313(d)(3). For significant losses, you may need to notify the federal agency.

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Equipment Use Requirements: The Priority Order

One of the most misunderstood aspects of grant equipment management is the use hierarchy. Equipment purchased with federal funds isn't locked into a single project forever. But there's a strict priority order for how it can be used.

Under 2 CFR 200.313(c), equipment must be used in the following order of priority:

Priority 1: The Project It Was Purchased For

The equipment's primary obligation is to the grant that funded it. If the grant is active and the equipment is needed for the project, it must be available for that purpose. You can't buy a piece of equipment with an NIH grant and then permanently reassign it to a different project while the NIH award is still active and needs it.

Priority 2: Other Projects Funded by the Same Federal Agency

When the equipment isn't needed for its primary project (either because the grant ended or there are gaps in usage), it should next be made available for other activities funded by the same agency. An NIH-funded microscope that's idle 40% of the time should be available for other NIH-funded research during those periods.

Priority 3: Other Federal Projects

After same-agency projects, the equipment can be used for projects funded by other federal agencies. The NSF-funded equipment can support a DOE project when it's not needed for NSF work.

Priority 4: Non-Federal Activities

Only after all federal needs are met can the equipment be used for non-federally funded activities, such as state-funded projects, privately funded research, or institutional purposes.

User Fees and Recharge Rates

When equipment is shared across multiple projects, you can charge user fees or establish recharge rates. However, the original project that purchased the equipment must not be charged a user fee, and the fee structure must be reasonable and based on actual operating costs. Revenue from user fees on federally purchased equipment should be used to offset operating costs or support similar activities.

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Disposition Rules: What Happens When You're Done

Equipment disposition is where many organizations stumble, especially when grants close and attention shifts to new projects. The rules depend on the equipment's current fair market value and whether it's grantee-owned or federally owned.

Grantee-Owned Equipment (The Most Common Scenario)

For most federal grants, the grantee holds title to equipment purchased with award funds. This is called "grantee-owned" or "recipient-owned" equipment. Here are the disposition rules:

Fair Market Value of $10,000 or Less Per Unit: You can retain, sell, or otherwise dispose of the equipment with no further obligation to the federal agency. No approval needed, no proceeds to share. This is the simplest scenario.

Fair Market Value Over $10,000 Per Unit: You have options, but the federal agency has a financial interest:

1. Retain the equipment. You keep it but must compensate the federal agency. The compensation equals the current fair market value multiplied by the percentage of federal participation in the original purchase.
2. Sell the equipment. Sell it and calculate the federal share of the proceeds under 2 CFR 200.313(e) and the award. The federal agency or pass-through entity may permit the recipient or subrecipient to retain $1,000 from the federal share for selling and handling expenses.
3. Transfer the equipment. The federal agency can direct you to transfer the equipment to another federal grantee or to the federal government itself.

Example calculation: You purchased a $50,000 instrument with 80% federal funds and 20% institutional match. The equipment is now worth $15,000. The federal share is 80% of $15,000, or $12,000. If it is sold, calculate the amount due using the sale proceeds and the agency or pass-through entity's disposition direction, including any permitted $1,000 selling-and-handling retention.

The 120-Day Rule

When you request disposition instructions from the federal agency and they don't respond within 120 days, you're authorized to retain or sell the equipment while still compensating the federal share. This prevents equipment from sitting idle indefinitely while you wait for bureaucratic approval.

Federally Owned Equipment

Some awards specify that the federal agency retains title to equipment purchased with grant funds. This is more common with Department of Defense awards, certain Department of Energy programs, and awards involving sensitive or classified equipment.

For federally owned equipment, you must:

• Submit annual inventory reports as required by the agency
• Request disposition instructions when the equipment is no longer needed
• Report equipment that's lost, damaged, or destroyed
• Not dispose of or transfer the equipment without explicit written agency approval

The management requirements are the same (property records, physical inventory, insurance), but you don't have the same flexibility in disposition because you don't own it.

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Insurance Requirements for Grant-Funded Equipment

Under 2 CFR 200.313(d)(4), you must provide equivalent insurance coverage for equipment acquired with federal funds as you provide for equipment purchased with your own money. And under 2 CFR 200.310, you must provide equivalent insurance coverage for real property and equipment acquired or improved with federal funds.

In practical terms, this means:

• If your organization insures its own equipment, grant-funded equipment must be covered at the same level, whether that's replacement cost, actual cash value, or another standard
• If your organization self-insures, the same self-insurance program must cover grant-funded equipment
• Specialized equipment (like equipment used in the field, transported between locations, or loaned to other institutions) may need additional coverage beyond your standard property policy

Any loss, damage, or theft of equipment must be investigated under 2 CFR 200.313(d)(3). For federally owned equipment, you may need to reimburse the federal agency for losses not covered by insurance.

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The Computing Devices Exception

Computing devices get special treatment under the Uniform Guidance. Under 2 CFR 200.1, computing devices are defined as machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or "peripherals") for printing, transmitting and receiving, or storing electronic information.

Computing devices are supplies if their acquisition cost is below the lesser of the recipient's capitalization level or $10,000, regardless of useful life. Whether a device may be charged directly depends on the applicable cost principles, consistent treatment, allocability, and the award terms.

To charge a computing device as a direct cost, you must demonstrate that:

• The device is essential and allocable to the project (not just convenient)
• It's not already included in your indirect cost rate (that would be double-charging)
• The cost is reasonable and consistently treated across similar projects

For more on how equipment and computing costs factor into your indirect cost rate, see our indirect cost rate guide.

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Equipment Purchased With Multiple Funding Sources

Large equipment often gets funded from multiple sources: a federal grant covers 60%, an institutional match provides 25%, and a state equipment program chips in 15%. This creates complications for management and disposition.

Tracking Federal Participation Percentages

Your property records must include the percentage of federal participation in the original purchase (2 CFR 200.313(d)(1)). When multiple federal agencies contributed, track each agency's share separately. This is critical for disposition, because each agency's financial interest is based on its proportional contribution.

Management Responsibilities

The management requirements of 2 CFR 200.313 apply to equipment purchased in whole or in part with federal funds. Even if federal funds covered only 30% of the purchase price, you still need to maintain full property records, conduct physical inventory every two years, follow the use priority order, and comply with disposition rules.

Disposition With Multiple Federal Funders

When two federal agencies each contributed to an equipment purchase, each agency is entitled to its proportional share of proceeds at disposition. If NIH paid 40% and NSF paid 30% of a piece of equipment now worth $20,000, NIH's share is $8,000 and NSF's share is $6,000.

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Common Equipment Audit Findings

Based on Single Audit reports and OIG reviews, these are the equipment management findings that appear most frequently.

1. Incomplete or Missing Property Records

The most common finding. Organizations either don't maintain all required data elements (missing FAIN numbers, no federal participation percentage) or don't have records at all for some equipment. This is an easy fix with a systematic approach to recording equipment at acquisition.

2. Physical Inventory Not Conducted

Organizations that skip the biennial physical inventory or conduct it on paper without actually verifying equipment locations. Some organizations have equipment listed at locations where it hasn't been for years.

3. Equipment Not Tagged or Labeled

While not explicitly required by 2 CFR 200.313, most federal agencies expect grant-funded equipment to bear a visible identification tag. Untagged equipment is harder to inventory and easier to lose track of.

4. Improper Disposition

Selling, donating, or disposing of equipment without following the disposition procedures, particularly for items over $10,000 in fair market value. This includes cases where equipment was disposed of without determining fair market value or without compensating the federal agency.

5. No Insurance Documentation

Organizations that can't demonstrate their grant-funded equipment is insured at the same level as institutionally purchased equipment. This is usually a documentation problem rather than an actual insurance gap.

6. Equipment Used for Unauthorized Purposes

Equipment purchased for a specific grant project being used exclusively for non-federal activities or for activities unrelated to the equipment's intended purpose, without following the use priority hierarchy.

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Best Practices for Equipment Management Compliance

At Acquisition

• Record all required property data elements before the equipment is put into service
• Apply an identification tag or label immediately upon receipt
• Take photographs of the equipment and its serial number plate for your records
• Update your indirect cost rate calculation if the equipment changes your capitalization patterns

During the Grant Period

• Conduct physical inventory at least every two years, and use a more frequent cycle if your risk assessment or award terms call for one
• Update location records immediately when equipment is moved
• Maintain usage logs for shared equipment, documenting which projects use it and when
• Review insurance coverage annually to ensure grant-funded equipment is adequately covered

At Grant Closeout

• Determine the fair market value of all equipment purchased with grant funds
• Request disposition instructions from the federal agency if equipment exceeds $10,000 in fair market value
• Document the disposition method and any proceeds from sales
• Retain records for the required retention period (generally three years after final financial report)

For a complete walkthrough of the grant closeout process, including equipment disposition, see our federal grant closeout process guide.

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Related Guides

• Grant Property Standards
• Grant Data Management and Recordkeeping
• 2 CFR 200 Uniform Guidance

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Sources

1. 2 CFR 200.313 - Equipment - The primary federal regulation governing equipment management and disposition for federal awards.
2. 2 CFR 200.1 - Definitions - Federal definitions of equipment, supplies, computing devices, and other key terms.
3. 2 CFR 200.439 - Equipment and Other Capital Expenditures - Cost principles governing when equipment expenditures are allowable on federal grants.
4. NIH Grants Policy Statement - Section 8.3.3 Property Management - NIH-specific property management system standards for grant-funded equipment.
5. OJP Part 200 Uniform Requirements - Department of Justice guidance on implementing Uniform Guidance equipment and property standards.
6. EPA 2 CFR 200 Equipment Changes Overview - EPA webinar materials explaining the 2024 Uniform Guidance revisions including the equipment threshold change.