News

Vatican Financial Reforms and Transparency Questioned Following Suspension of External Audit

Catholic Communications, Sydney Archdiocese,
22 Apr 2016

Archbishop Angelo Becciu

The Vatican has suspended its first major independent audit by the global accounting firm PricewaterhouseCoopers.

Some sources in Rome and within the Vatican are now questioning the Holy See's committment to cleaning up its finances.

On April 12, Italian Archbishop Giovanni Angelo Becciu, assistant to the Secretary of State who oversees the day-to-day running of the Roman Curia, sent a letter to all Vatican entities informing them that an audit  by PricewaterhouseCoopers (PwC) had been suspended pending an analysis of "certain aspects" of their auditing arrangement.

Prior to hiring PwC, the Vatican had relied on an external Italian auditor rather than a major global independent firm.

The external audit had been directed and unanimously passed by the Council for the Economy. 

The Guardian reported from Rome the surprise decision has exposed a deep rift between the church's old guard - a powerful Italian bureaucracy resistant to greater transparency - and supporters of financial reform, led by Cardinal George Pell, Prefect of the Secretariat for the Economy and hand-picked by Pope Francis.

When informed of the audit suspension Cardinal Pell said he was "a bit surprised", adding he anticipated the audit to "resume shortly" after "discussions and clarifications" of some issues. He also said the work of the internal auditor which covers all areas has not been interrupted.

The Guardian also reported; "The Holy See's finances have long been seen as a mystery, with Pell himself acknowledging in 2014 that 'hundreds of millions of euros' had been discovered 'tucked away' and off the city-state's balance sheets. In 2014, when Pell was chosen to become secretariat of the economy, a new role, Francis endorsed a plan for the Vatican to adopt globally accepted accounting standards and better internal controls, transparency and governance of the church's vast finances. That included a decision to allow 'senior and experienced experts' in financial administration to help manage and oversee the church's finances."

Writing in Crux, John L. Allen says; "When Pope Francis' landmark project of financial reform was announced two years ago, one linchpin was the idea that the world would no longer just have to take the Vatican's word for it in terms of how much money it has and where it's going.

Cardinal Pell, Prefect of the Secretariat
for the Economy

"Instead there would be an incredible audit carried out according to generally accepted business standards in the 21st century. That step, officials said, would represent a revolution in the direction of transparency and accountability.

"As it turns out, it's now a revolution delayed."

The letter to suspend the audit was sent at the behest of the Secretary of State, Cardinal Pietro Parolin.

John L. Allen wrote one area of concern for sending the letter had to do with provisions of the contract allowing PwC to desseminate financial information about the Vatican internally, and, also with external agents with whom the firm collaborates.

"Since the Vatican takes its sovereignty and autonomy seriously, including the right to preserve confidential financial information, those codicils were seen as raising red flags."

Edward Pentin writing in National Catholic Register said the move to suspend the audit has been seen as a move not only to undermine the work of Cardinal Pell and the department he runs, but moreover the Council for the Economy which was responsible for appointing the auditors.

Other Vatican sources have reported some within the Vatican are afraid the audit would uncover information they don't want uncovered and are worried about losing soverign control over Vatican finances and the suspension sends a clear message that the Secretary of State is again "in control of the machine".

This is being seen by many as an old-fashioned power play, with the Secretariat of State having traditionally functioned as a sort of prime minister's office in the running of Vatican affairs and being the immediate centre of power below the Holy Father.

Edward Pentin concluded; "It's becoming clear that the rigour of the audit in an effort to raise its financial transperency to international standards is unnerving some in the Vatican."

Cardinal Pell and Pope Francis

Further comment by Ed Condon in the Catholic Herald says; "It is not to be doubted that the autonomy and vigour of Cardinal Pell's reforming work has created some resentment among other curial departments, and State in particular. After centuries of a settled, cosy, distinctly Italian way of doing things, Pell's defiantly outsider perspective and methodology has been as jarring as it has been effective. To be clear: Cardinal Pell has many enemies in Rome who never wanted him there and who would love to see him leave. From this perspective, the idea that the Secretariat of State, which in addition to being the more traditional power centre is also the most solidly careerist in its makeup, is trying to tame Cardinal Pell and his department and reassert control is compelling. But there is one problem with this theory: it isn't legally possible.

"If you read Fidelis dispensator et prudens, the motu proprio which established both the Council and the Secretariat for the Economy, and the office of Auditor General, the document is absolutely clear that they have total autonomy, they report directly to the Holy Father and through no other department. Bluntly put, Archbishop Becciu does not have the authority to cancel a stationary order originating in Pell's department. Since only Pope Francis himself has the power to suspend the audit or to over-rule Cardinal Pell, why is a letter coming from the Secretariat of State announcing decisions well outside of its purview?"

For full coverage:


http://www.theguardian.com/world/2016/apr/21/vaticans-suspension-of-major-pwc-audit-exposes-internal-rift-george-pell

http://m.ncregister.com/blog/edward-pentin/cardinal-pell-a-bit-surprised-by-suspension-of-auditors/#.VxjX8NQoarV

http://www.cruxnow.com/church/2016/04/20/pulling-plug-on-audit-means-gut-check-time-for-vatican-reform/

http://www.catholicherald.co.uk/commentandblogs/2016/04/21/outside-audit-suspended-has-civil-war-erupted-at-the-vatican/