17 Jul 2015 11:29am

Over €1bn found hidden off Vatican books

Over €1bn hidden off the Vatican’s books were identified by Cardinal George Pell, the man charged with cleaning up its finances

In its first financial statement published since the appointment of Pell, the Vatican announced that assets previously off the balance sheets amounted to €1.1bn (£776m), previously unannounced liabilities totalled €222m.

Pell was appointed by Pope Francis in an attempt to wrest Vatican finances out of the hands of Italian bureaucrats,in December last year he wrote in the Catholic Herald newspaper that the finances were in not as bad shape as had been previously imagined.

He wrote, “In fact, we have discovered that the situation is much healthier than it seemed, because some hundreds of millions of euros were tucked away in particular sectional accounts and did not appear on the balance sheet.”

For hundreds of years, he wrote, Vatican finances were unregulated, and allowed to “lurch along, disregarding modern accounting standards”.

But, as yesterday’s financial statement sought to show, Pell has ushered in a new financial rigour, with 2014 a “year of transition” to new financial management policies based on International Public Sector Accounting Standards (IPSAS).

In a statement, The Vatican said that department heads had been “asked to ensure they had included all assets and liabilities and provide appropriate certification as to [their] completeness and accuracy.”

External auditors had ensured that “consistent with sound audit practice, amounts could be independently verified”.

The Vatican’s first independent auditor general, Libero Milone, was appointed in June by Pope Francis. The ICAEW chartered accountant and former chairman of Deloitte Italy was one of Pell's first steps to better financial standards. He had previously said that having an independent auditor was a key part of the "separation of powers" necessary for reforming the Vatican's financial activity.

In June last year the Pope sacked the full board of the existing financial watchdog, replacing it with a more “international” group of experts.

Ellie Clayton

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