Vatican backs off external audit, asking instead for internal audit assistance

by Joshua J. McElwee

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The Vatican has backed off its plan to have a major international firm conduct a full external audit of the city-state’s financial system, choosing instead to have that firm play an assisting role in an audit conducted by the Vatican’s own auditor general.

PricewaterhouseCoopers (PwC), one of the largest auditing firms in the world, had been contracted by the Vatican’s new Secretariat for the Economy to undertake the audit last December. Their contract had been suspended in April, with little official notification of the cause for the suspension.

Chief Vatican spokesman Jesuit Fr. Federico Lombardi announced Friday that the Vatican will “promptly reassume its collaboration” with the firm.

But the spokesman said that during the time of the suspension of the contract “it was recognized that, by law, the task of performing the financial statement audit is entrusted to the Office of the Auditor General (URG), as is normally the case for every sovereign state.”

“Given that, in conformity with the legal framework in force this institutional responsibility falls upon the URG, PwC will play an assisting role and will also be available to those dicasteries that wish to avail themselves of its support and consulting services,” said Lombardi.

The original move for the full external audit of the Vatican’s diverse financial systems had been seen by many as a public sign of the insistency with which Pope Francis wanted to show the world that the city state, long known for financial scandal, had reformed.

Cardinal George Pell, the head of the new economy secretariat, was thought to have led the push and to have been caught in surprise by the audit’s suspension two months ago.

As part of the reforms, Francis created the Vatican’s office of the auditor general in March 2015, giving the office near-complete authority to investigate irregularities in accounting -- extending even to unannounced on-site investigations of Vatican offices.

The pontiff later appointed Libero Milone, a Dutch-born and London-educated financial professional, to lead the office.

Lombardi said Friday that the new agreement between the Vatican and PricewaterhouseCoopers “provides for a broader collaboration … that is adaptable to the Holy See’s needs.”

“This agreement permits all of the entities of the Holy See to participate more actively in the reforms under way,” he said.

The spokesman said the agreement also includes the possibility of the auditing firm providing courses of formation in international financial norms for Vatican officials.

[Joshua J. McElwee is NCR Vatican correspondent. His email address is Follow him on Twitter: @joshjmac.]

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