Vatican financial system restructuring begins with new secretariat

The Italy News.Net Monday 24th February, 2014

VATICAN CITY - In a complete overhaul of the Vatican financial system, which has been bogged by scandals, Pope Francis has set up a new 'Secretariat for the Economy' which will have authority over all economic and administrative activities within the Holy See and the Vatican City State.

The Secretariat, to be headed by Australian Cardinal George Pell who speaks Italian, will be responsible, among other things, for preparing an annual budget for the Holy See and Vatican City State as well as financial planning and various support functions such as human resources and procurement.

The Secretariat will also be required to prepare detailed financial statements of the Holy See and Vatican State, the Vatican said in a statement Monday.

The restructuring of the Vatican financial system is being undertaken on the recommendations of the Pontifical Commission for Reference on the Organization of the Economic- Administrative Structure of the Holy See (COSEA), after they were endorsed by both the Council of 8 Cardinals, established to advise the pope on governance, and the Committee of 15 Cardinals, which oversees the financial affairs of the Holy See.

Established as the "coordination structure for economic and administrative affairs of the Holy See and the Vatican State", it has been tasked with recommending changes to simplify and consolidate existing management structures and improve coordination and oversight across the Holy See and Vatican City State.

COSEA has also recommended more formal commitment to adopting accounting standards and generally accepted financial management and reporting practices as well as enhanced internal controls, transparency and governance.

The move follows two senior Italian clerics being charged last month with laundering millions through the Vatican bank.

One of the clerics Monsignor Nunzio Scarano is already on trial and under house arrest on separate charges of plotting to smuggle 20million euros ($26million; 17million pounds) into Italy.

Following a series of scandals, the Pope had set up a commission of inquiry in 2013.

As part of the restructuring, the Vatican said the Administration of the Patrimony of the Apostolic See (APSA), the department which manages the Holy See's financial holdings, will become the Vatican's central bank, with "all the obligations and responsibilities of similar institutions around the world".

The change will not affect the status of the Institute for Works of Religion (IOR) for the time being, a spokesman said

The IOR is one of the world's most secretive organisations. It has 114 employees and 5.4billion euros of assets, reports BBC.

New arrangements also include the appointment of an Auditor-General, appointed by the Holy Father who will be empowered to conduct audits of any agency of the Holy See and Vatican City State at any time.

The pope has also hired a US financial services company to examine all 19,000 accounts to ensure that international rules against money laundering are being observed stringently.