On Saturday Francis signed the new statutes and approved other changes to bolster the reforms that have cleaned out the once scandal-ridden institution.

The reforms were initially launched by Francis's predecessor Pope Benedict.

Until Benedict and Francis sought to curb the bank's activities, it had been been caught in cases of corruption, tax evasion, embezzlement, money laundering and real estate fraud.

Some of the cases involved top officials and prelates.

Andrea Tornielli, the Vatican's editorial director, says the new statutes are "an important step in the process of adhering to the best international standards".

Although the bank has opened its books to external auditors over the past few years, it was mandated only to undertake internal audits. The new statutes make external audits obligatory.

The new rules also ban bank employees, most of whom are non-clerics, from holding consultancies or other roles with outside institutions.

In addition, the number of members on the bank's lay board of supervisors, which is made up of internationally known financial experts, is increased from five to seven. No member of the Vatican bank is on this board.

Increasing the number of lay board members will strengthen its role while reducing the power of the five-member supervisory commission of cardinals.

For decades before reforms were implemented, the Vatican bank was embroiled in numerous financial scandals. People with no right to have accounts at the bank opened them and used them for illicit purposes, with help from corrupt bank insiders.

The bank's stated purpose is to manage funds for the Church, Vatican employees, religious institutes, and Catholic charities.

During the past six years, hundreds of Vatican bank accounts have been closed.

An on-site inspection of the bank by the Financial Information Authority (the Vatican's controller), last year found the bank was complying with anti-money laundering legislation. The subsequent report said the inspection outcome was "substantially positive".

In 2017, Italy put the Vatican on its "white list" of states with cooperative financial institutions, ending years of mistrust.

The same year, Moneyval, a monitoring body of the Council of Europe, gave Vatican reforms a mostly positive evaluation, particularly those carried out at the bank.

Source

• America Magazine
• Reuters
• Image: Catholic News World

Cardinal Pell gave a statement to The Tablet in the wake of the Holy See announcing that a full audit by PricewaterhouseCoopers would not take place.

Instead, PwC will assist an internal auditor-general with the work.

The cardinal is the prefect of the Vatican's Secretariat for the Economy.

He said the new arrangement "is not a rejection of financial reform".

Rather it is "a recognition that the many challenges in transitioning to full implementation must fit the context and a way forward is being found".

But Cardinal Pell said the financial reforms of the Holy See so far are "irreversible".

This has ensured there are no more "pools of darkness in the Vatican", he said.

Cardinal Pell stated: "The Vatican is committed to transparency, international cooperation and the use of contemporary international standards in financial reporting."

But he pointed out that the "full implementation of such changes will take time".

Cardinal Pell added that work needed to be done to bring expenditure under control.

He said that the Vatican now prepares one overarching budget, and it monitors expenditure, meaning that the Holy See knows where it stands financially.

He added that the work culture was changing with development programmes led by Georgetown University, in the United States.

"The vast majority of the financial staff appreciate the modernisation and are cooperating happily," he said in a statement.

But the cardinal said more needed to be done to streamline budgeting and expenditure as well as battling significant "cash deficits" over the last three years.

He added that hundreds of millions of euros were needed to fund a shortfall in the pension fund.

"The Vatican financial situation is not critical, but we face significant challenges, which can be met," Cardinal Pell explained.

Sources

• The Tablet
• Image: Catholic News Agency

The Vatican announced last week that PricewaterhouseCoopers (PwC) would no longer be responsible for the audit.

Instead it will be performed by the Holy See's Auditor General.

In a statement, the Vatican noted that PwC would play an "assisting role" to the Auditor General.

PwC will also be available to help Vatican departments with support and consulting services.

The Vatican said this new arrangement will enable "a broader collaboration" with PwC.

"This agreement permits all of the entities of the Holy See to participate more actively in the reforms under way," the statement noted.

The Holy See said that "by law" the Auditor General should undertake the audit as this is "normally the case for every sovereign state".

The position of the Auditor General, first established under Francis, reports directly to the Pope and has the power to look at the finances of any Vatican identity.

The current Auditor General is Libero Milone, a former chairman of Deloitte in Italy.

The Vatican's statement stressed that the path to achieving international accountancy standards is "normally complex and prolonged".

The Holy See suspended the audit by PricewaterhouseCoopers (PwC) in April in order "to examine the meaning and scope of certain contract clauses".

PwC's auditing was unilaterally and without the Pope's permission, put on hold by Cardinal Angelo Becciu, a high-ranking official at the Secretariat of State, in what was seen as a power struggle between Cardinal George Pell and senior curial officials.

One of the problems was reportedly the fact that Cardinal Pell was one of the signatories to the contract with PwC.

This assertion was challenged by the cardinal who said that PwC's three year deal - reportedly worth US$3 million - was agreed by the Council for the Economy, the body led by German Cardinal Reinhard Marx, which also oversees Cardinal Pell's department, the Secretariat for the Economy.

The latest Vatican statement stresses that the earlier suspension of PwC's work was not an attempt to "hinder reforms".

Sources

• The Tablet
• Catholic Herald
• Image: Catholic Herald

Although he turns 75 next month, the cardinal plans to continue in his current post until 2019.

This was confirmed in a statement his office released late last month.

A Crux article reported that, according to the cardinal's office, "Pope Francis had confirmed the Australian prelate as the Vatican's top financial official until at least 2019".

Cardinal Pell is currently in the middle of what some commentators are seeing as a power struggle between departments in the Roman Curia.

An external audit of the Vatican's finances by PricewaterhouseCoopers was suspended last month by a senior official at the Holy See's Secretariat of State, Archbishop Angelo Becciu.

Problems with the firm's contract were cited, including the fact that Cardinal Pell was one of the signatories, The Tablet reported.

This assertion was challenged by the cardinal who said the PwC agreement was agreed by the Council for the Economy, the body led by German Cardinal Reinhard Marx which also oversees Cardinal Pell's department.

According to statement from Cardinal Pell's office, "it is also interesting to note so called ‘concerns' about the PwC audit and contract were only raised when auditors began asking for certain financial information and were finding it difficult to get answers".

A communique from the Holy See released last Tuesday said there were issues with "the meaning and scope of certain clauses" and "methods of implementation" with the PwC deal.

Last week, Pope Francis paid a visit to Cardinal Pell's department.

In its statement, Pell's office said the Pope spent an hour with the secretariat's team during which he took part "in a friendly and lively discussion".

It added that Francis "repeated the need for outside or external professional inclusion and assistance".

Sources

• The Tablet
• Vatican Insider
• Statement from Cardinal Pell's office
• Crux
• Image: Crux

The audit will look at financial investments, real estate and cultural assets.

It will be performed by Price Waterhouse Coopers and will start immediately, said Vatican spokesman Fr Federico Lombardi, SJ.

Assets that would never be sold and thus have no market value - including St Peter's Basilica, the Sistine Chapel and priceless art treasures by Michelangelo - will be included in financial statements.

But the Vatican is still considering whether and how they should be valued.

The decision to work with one of the world's top four auditors continued "the implementation of new financial management policies and practices in line with international standards", Fr Lombardi said.

A Vatican financial statement this year revealed that the city-state's departments had stashed away 1.1 billion euros (US$1.2 billion) of assets that were not declared on any balance sheet.

The head of the economy secretariat, Cardinal George Pell, said last year that departments had "tucked away" millions of euros and followed "long-established patterns" in managing their affairs without reporting to any central accounting office.

At Cardinal Pell's suggestion, Pope Francis has set up a "Working Party for the Economic Future", which brings together the Secretariat of State, the Vatican Bank and other agencies.

The Pope has asked that group to address "the financial challenges and identify how resources can be devoted to the many good works of the Church, especially supporting the poor and vulnerable", said Danny Casey from the Secretariat for the Economy.

The working group will study measures to cut costs and raise revenue as part of a long-term financial plan, Bloomberg reported.

"This will include comparing actual expenditure against budgets at a consolidated level, which is a new initiative," Mr Casey said.

The working party held its first meeting last month.

Last year, Cardinal Pell said the Vatican's total assets were worth more than US$3billion.

Sources

• Bloomberg
• Reuters
• Image: Historvius

A recent circular letter from the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life dealt with the use of financial resources by religious orders.

Under church law, each order is required to have an "economo," or treasurer, and that person should receive specific training in budgeting and bookkeeping, but every member of an order must have a general idea of the community's assets and expenditures.

The Congregation told communities they must adopt modern budgeting and bookkeeping practices and ensure their spending is for ministries in line with their founding purpose and the good of the whole Church.

"All members of the institute should be aware of the importance of working with a budget and estimates in the knowledge that these reflect the values and spirit of the institute," the document said.

Because the most pressing needs of the church and society may change over time, every order must "define which works and activities to pursue, which to eliminate or modify" and what new areas of ministry they should try to develop, it said.

Too often, the letter said, assigning economic oversight to just one person "generated lack of interest about economics within the community, leading to a loss of contact" with the costs of the community's daily life and activity and "provoking a dichotomy between economics and mission."

Efficient monitoring, including professional outside audits, will also help religious communities make decisions around projects.

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It follows a consultation on tentative proposals last year which indicated concerns that the requirements captured too many charities and that these charities were not resourced to meet the new demands.

Under the new proposals, charities with operating expenditure of $1 million or more would be required to have an audit completed. Those with operating expenditure of $400,000 to $1 million could voluntarily obtain an audit or a review.

The Minister of Commerce Craig Foss says these revised requirements would apply to 3,150 of the 25,000 registered charities.

Submissions close 17 May 2013.

Source

• Scoop
• Image: Teara

"We don't want a few organisations damaging the reputation of all New Zealand charities," says Foss. "Charities make a valuable contribution to society and it's important to get the balance right. They must be transparent and accountable but not subject to too much interference.

"The changes under consideration will only affect the largest 20 per cent of charities in New Zealand and leave smaller charities unaffected," says Mr Foss.

A higher level of transparency and accountability is being called for.

Registered charities are currently required to include financial statements in their annual return when it is lodged with the Charities Commission, but there is no requirement for the financial statements to be independently audited or reviewed.

Charities that spend more than $300,000 a year would have their financial statements audited, and charities spending between $200,000 and $300,000 would be required to complete an audit or assurance engagement.

Interested parties have until 20 July 2012 to make submissions.

Source

• New Zealand Herald
• Scoop
• Law Society
• Image: Stuff.co.nz - Datamail