“He told his hearers that he was there that evening for no terrifying, no extravagant purpose; but as a man of the world speaking to his fellowmen. He came to speak to business men and he would speak to them in a businesslike way. If he might use the metaphor, he said, he was their spiritual accountant; and he wished each and every one of his hearers to open his books, the books of his spiritual life, and see if they tallied accurately with conscience.” – Dubliners, James Joyce

The Vatican has been accused of several cases of financial mismanagement involving top members of the clergy throughout its history, but now the sense of a crisis is out of control and up front in particular cases.

The latest became public knowledge through several means, but mainly by the publication of two books Merchants in the Temple and Avarizia (Greed) written by Italian journalists.

The books are based upon first-hand information provided by two persons, one of them a clergy member, who were appointed to a special commission in charge of investigating and overhauling financial management within the Roman Catholic Church.

In an effort to produce a prompt and reliable response to what has been a saga of malpractices, the Vatican Council for the Economy which was created on February 24, 2014, has recently appointed Price Waterhouse Coopers (PCW) as the external auditor for its financial statements.

The election of PWC is also a subject of critics.

In particular, PWC was also involved in financial scandals such as those with Tesco and Bill Gates. Briefly, Tesco, the largest U.K. supermarket company, ended its contract with PWC in May 2015 after the opening of an investigation by the Serious Fraud Officeii, while the charity foundation of Mr. Bill Gates has sued Petrobras and PWC, as an auditor of Petrobras, for corruption practices of Petrobras along with construction companies in Brazil.

Short review of the evolution of accounting practices

Notwithstanding, the general public considers accounting practices as a set of procedures which are performed regularly to report financial statements to regulatory bodies. Accounting is a long lasting discipline that has evolved to account for economic actions, in general.

Indeed, it is understood that first developments of mathematics and writing by Sumerians were based upon abstract counting and that the concept of negative numbers was conceived by Indians following the need to account for negative claims.

Curiously, the first integrated framework for accounting practices was developed by Fray in the midst of the Italian Renaissance.

The success of Fray Luca Pacioli’s work at the time of its publication by the end of the XV Century, was neither due to its novelty (as there were some preceding texts containing sophisticated notions on accounting) nor due to its originality (as it is a compilation of the mercantile recording practices at the time) but due to its wide recognition as a means to provide a coherent narrative of economic actions (mercantile transactions at the time), supported by a language that conveyed the mathematical dimension (arithmetic at that time).

This close relationship between language and mathematics may be the underlying reason for the long-lasting validity of Particularis de Computis et Scripturis –which was the title of the work written by Fray Pacioli.

Indeed, more than half a millennium after its publication, the conceptual (both, abstract and practical) double-entry recording of transactions, for which the applicable language is at least equally important as the applicable mathematics, still remains at the center of the accounting discipline.

From the reporting point of view, the underlying aim of the accounting discipline has been to provide reliable information for internal and external uses.

Church and business companies could not be easily assimilated under the accounting perspective

In Spanish (Castellano), the narrative and the quantitative notions are both present in the verb “contar” and the noun “recuento” which is linked to “relato” (narrative); but the notion of “rendir cuentas” (being accountable) – which is present in the English verb “to account for” – is not present in the Spanish verb “contar.”

Apparently, what is not clearly understood by the Vatican officials is that, with or without external auditors, “to be accountable” requires the commitment of recording economic actions within a two-sided framework (basically, credits and liabilities) and to open such records to the scrutiny of somebody else.

In particular, from the accounting perspective, the amount of money received by the Church, mainly money received as Charity, should be recorded as a liability, even when there is no person willing and able to set a claim for such money.

The introduction of accounting practices could be a useful step forward; however true reform of the financial management within the Catholic Church calls for a high level of consciousness of its hierarchy in the face of the common people.