Rebecca, no one that I know of is considering this a finding. This is primarily due to the fact that HUD gave them the CSP funding. HUD account executives know the balances in the RR account. They have access to all of these filings. Further, I assume that the balance in the RR account was more than the minimum 250/unit. HUD gives their account executives a lot of leeway to approve these things.

Secondly, HUD was desperate to expend the CSP money. They had so much they even did another round of funding. Lastly, I am unsure that the client has violated anything. The Notice does say that they have to use RR first. However, the real issue is the certification. Did they make a false statement? AS yo can see below, there is no mention of RR usage.

Owner’s Certification: I certify that

1. the requested payment was computed in accordance with HUD’s Housing Notice H-2020-11. It reflects only expenses incurred during the operating period(s) specified for eligible activities and purposes.
2. No amount included on this funding request has been paid from other forms of governmental or philanthropic assistance provided to address the impact of COVID-19.
3. I have considered current project funds and anticipated revenues over the next 12 months and require this funding in order to address project operating costs.
4. If receiving CSP assistance for a Section 8 HAP contract, I agree to deposit an amount equal to the amount of the CSP in the residual receipt account, prior to taking any cash distributions before 11/30/2021. Or, if the Section 8 contract and governing regulations do not require the project owner to maintain a residual receipt account, I agree that upon taking distributions at any point from the issue date of this notice through 11/30/2021, an amount at least equal to the amount of the CSP must be retained in the operating account to address future project costs that is over-and-above the resources needed for current operating requirements.
5. The property and ownership are in good standing with HUD, as defined in Section VII of Housing Notice 2020-11.
6. If receiving CSP assistance for a Section 8 HAP contract that expires within 120 days, I anticipate renewal of the contract and have not communicated intent to opt-out.
7. Upon request by the Department of Housing and Urban Development, its duly authorized representative, or the Comptroller General of the United States, I will make available for audit all books, records and documents related to this assistance payment. Warning: HUD will prosecute false claims & statements, which may result in criminal conviction and/or the imposition of criminal fines and/or civil penalties, to the full extent allowed by law.

I think everything is fine with no finding, but a final determination is up to you.

Finally, all CSP money came from the Section program. There really is no separate CFDA number. However, it is totally appropriate to break-out the CSP money on the SEFA within the Section 8 cluster. I believe this is clear from the reporting section of Housing Notice 2020-11.

Amounts received from a CSP shall be treated as project funds and must be managed consistent with other rental assistance provided by HUD under the applicable HAP, PRAC, SPRAC or PAC contract. CSP funds should be deposited into the project’s general operating account (account 1120 on the Balance Sheet) and recorded as Special Claims Revenue (account 5193). The project CPA should also include a footnote in the Notes to the Annual Financial Statements that states how much was received and how it was used. These amounts must be included in the Schedule of Expenditures of Federal Awards (SEFA) for the year. Any deposit of surplus cash in the project residual receipts account or retention of amounts in the project operating account that is done in accordance with Section VI of this notice, must also be clearly denoted. As with other project funds, the expenditure of CSP funds must be done in a manner that is consistent with all applicable civil rights laws, including the Fair Housing Act, Title VI of the Civil Rights Act of  1964, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act. See 24 C.F.R. § 5.105(a).