Vatican Inks Revised Contract with Global Firm for Auditing Support

The Crux
June 10, 2016

https://cruxnow.com/vatican/2016/06/10/vatican-inks-new-contract-global-firm-financial-audit/

After suspending a contract for an external audit in April, the Vatican on Friday announced a new agreement with PricewaterhouseCoopers (PwC) to act as a resource for implementation of global accounting standards while protecting the primary role of the Vatican's own new Office of the Auditor General in carrying out annual financial reviews.

ROME - In the latest twist to the saga of Pope Francis’s financial reform, the Vatican announced Friday it has entered into a new contract for auditing and consulting services with the global firm of PricewaterhouseCoopers (PwC), this time as a resource for its own in-house auditing agency as well as other departments.

“PwC will play an assisting role, and will also be available to those [departments] that wish to avail themselves of its support and consulting services,” a Vatican statement released Friday said.

The new contract, according to the statement, “provides for a broader collaboration with PwC that is adaptable to the Holy See’s needs,” and means the Vatican will “promptly resume its collaboration with PwC.”

The statement also says that by law, primary responsibility for performing the Vatican’s annual audits “is entrusted to the Office of the Auditor General (URG), as is normally the case for every sovereign state.”

The reference is to a new office created in 2014 as part of Francis’ financial overhaul, one designed to carry out annual Vatican audits.

In April, the Vatican announced that a previous contract with PwC for auditing services had been suspended.

At the the time, Italian Archbishop Angelo Becciu, the number two official in the Vatican’s Secretary of State, said there were concerns with the scope of the contract and who entered into it. On background, sources said among the issues was how the arrangement with PwC would affect the role of the auditor general, and whether adequate protections were provided for the Vatican’s financial data.

In effect, the new contract announced Friday is designed to comply with the Vatican’s own legal framework, specifying that departments can voluntarily utilize PwC’s services in implementing International Public Sector Accounting Standards (IPSAS) in their area of responsibility.

Some media reports suggested in April that the suspension of the original contract with PwC reflected pushback from forces within the Vatican hostile to the idea of financial accountability, but Friday’s statement firmly rejects that interpretation.

“The suspension was not due to considerations regarding the integrity or the quality of PwC’s work, nor is it attributable to the desire of one or more entities of the Holy See to hinder reforms,” it says.

In fact, according to the statement, the new arrangement will allow all Vatican departments “to participate more actively in the reforms underway.” It’s expected that the Vatican auditor general will draw on PwC services in carrying out its first annual financial review.

Friday’s statement also suggested that patience will be needed to see those reforms fully implemented, saying that application of international accounting standards “is normally complex and prolonged.”

“That path requires a series of legislative choices as well as the adoption of administrative and accounting procedures, which are presently under development,” it said. Observers say that a four to five-year period for complete implementation is not uncommon.

The bottom line, according to the statement, is that revision of the PwC contract is a contribution rather than a setback to reform.

“The commitment to the economic-financial audit of the Holy See and of the State of Vatican City has been, and remains, a priority,” it says.

Observers say that under the terms of the new arrangement, and in keeping with the design of the financial reforms Pope Francis has decreed, primary responsibility for annual auditing will belong to the auditor general’s office, currently led by Italian layman Libero Milone.

Milone’s professional experience has largely been in England, and he’s a former member of the auditing committee for the United Nations Worlds Food Program.

In turn, that decision is seen as part of a broader option to foster long-term developments of the Vatican’s own internal regulatory agencies, rather than relying on outsourcing to implement financial reform. The “Financial Information Authority,” the Vatican’s anti-money laundering watchdog, is the most commonly cited example.

Jeffrey Lena, an American attorney who provides legal counsel to the Vatican and who often consults on matters related to the pope’s financial reform, declined a Crux request to comment on the Holy See’s restructured arrangement with PwC.