Investment Losses against s94 contributions

[djenkins]

Our Council is about to realise a loss of principal invested in one of our CDO investments. This will be a significant amount of money and will obvioulsy impact on our cash & investments balances and the reserves that make up this balance.

Has any Council out there lossed any money through the GFC and consequently written off some of this loss (or the whole amount) against their externally restricted cash like DWM or Section 94 contributions?

Section 94 contributions make up a significant portion of Council's overall investment portfolio and in good times any interest earned gets credited to the s94 reserve. So, my argument is that in bad times we should be able to write off any losses of invested funds against s94 contributions?

Has anybody done this and had it approved by their internal/external auditors?