The loss was revealed in a yearly audit report that graphically demonstrated the impact of the credit crunch on council’s coffers.

The $4.3 million loss is based on the current market value of a number of troubled investment products, many of which still have several years before they reach full maturity.

However the news isn’t all dire, with council still recording a surplus of $787,000 and an increase in income from rates and annual charges of $575,000.

Council staff is also having more success in extracting overdue rates from residents, with 5.82 per cent of rate revenue still unpaid compared to 6.91 per cent for the previous year.

The Morse Group auditor who went through council’s finances with a fine-tooth comb told councillors and staff on Thursday evening that the losses were far less severe than many other regional councils.

“Places like Gosford and Parkes who invested heavily in the troubled products are in a drastically different position to Orange City Council,” he said.

Finance policy committee chairperson, Cr Chris Gryllis, said council’s overall financial position was in “pretty good shape”.

“We are in very good shape when you consider we have a number of substantial projects underway and that we have suffered a drop in water usage and associated revenue,” he said.

“This is a team effort, we are in good shape because we have very good management and overall, pretty good councillors.”

Orange has a $66 million investment portfolio.

Key findings of the audit report:

Rates and annual charges income rose by $575,000 to $24.6 million.

Surplus of $787,000 compared to surplus of $6.7 million in 2007.

Interest and revenue from investments down $3.6 million due to economic crisis.

5.82 per cent of all rate revenue and annual charges still remain unpaid.