The Big Four firm was chosen in December to perform the Vatican’s first external audit in a bid to make its finances more transparent.
It followed a series of scandals, including the discovery of €1bn hidden off the Vatican’s books.
However, the secretariat of state of the Vatican sent letters to all departments last week announcing the suspension.
The National Catholic Register, which first reported the news, said, “There was a shock to the system in terms of how rigorous the audit would be; the international standards feel a bit intrusive.”
Cardinal George Pell, prefect of the Vatican secretariat for the economy, said in a statement on Thursday he was “a bit surprised” by the decision of the secretariat of state, but added he expects the audit to “resume shortly” after “discussions and clarification” of some issues.
The suspension of the audit suggests there is conflict between the Italian bureaucrats and the supporters of financial reform.
A person familiar with the issue told the Guardian those who opposed PwC’s audit were concerned that the Vatican could be exposing itself too much and whether they could trust the firm to keep the information confidential.
Cardinal Pell, who announced the discovery of hundreds of millions of euros "tucked away" in various accounts in December 2014, was appointed by Pope Francis to clean up the Vatican’s finances shortly after the Pontiff sacked the entire board of its financial watchdog.
A PwC spokesperson said the firm does not comment on client work.