AUDITORS TO REVIEW CSUN'S $2.27 MILLION LOSS.

Byline: Sharline Chiang Daily News Staff Writer

California State University, Northridge, administrators said Monday auditors will decide how the university should report in its books an estimated $2.27 million loss from investments.

University controller Robert J. Kiddoo said the loss, due to risky investments made in the early 1990s, will not be taken from CSUN's general fund but from an auxiliary reserve fund.

Known as the state trust fund, the auxiliary reserve fund includes revenues generated through such services as campus printing, summer programs, and fees charged for using parking lots. The state trust fund is used for investments and to support the general fund.

Several auxiliary groups - including the Associated Students, the University Corp. and the University Student Union - also had the university in the early '90s make investments for them that included, among other things, placing money in derivatives, a risky breed of securities.

This spring, after losses were calculated, principal and interest amounts were returned to each group, Kiddoo said, so all investors other than the university have since been repaid.

The related investments were liquidated this spring, shortly after the losses cropped up in March during initial in-house audits, he said.

``We could have kept the losses hidden in the books, but we needed the cash, and we wished to present the information fairly and accurately to the public,'' Kiddoo said Monday.

Kiddoo noted that the loss did not involve money from the Federal Emergency Management Agency or student aid, or any state or federal funding - money universities typically place in low-risk, low-interest investments.

The $2.27 million loss was discovered by Kiddoo while the university was overhauling its books to comply with a state-mandated law passed last year requiring California State University campuses to use a standardized accounting method.

Kiddoo, a veteran accounting professor at CSUN, was promoted by university Vice President Art Elbert in January to handle the change.

Kiddoo, CSUN's first controller, said he is still in the process of compiling information on the university's finances for auditors. The university's reports are due in December. A final CSU trustees audit report will determine how the $2.27 million loss will be reported. A full audit report on several campuses, including CSUN, is expected to be made public in February.