The Holy See and Vatican City State administration released their 2014 financial statements Thursday amid an ongoing process to reform Vatican finances and accounting standards. The Holy See’s 2014 deficit was about $27.8 million, slightly more than the 2013 deficit of $26.6 million. In total, the Holy See’s net assets increased by over $1 billion. This is an outcome of adjustments “made to include all assets and liabilities in the closing balances for 2014,” the Holy See Press Office said July 16.   The Holy See’s finances are distinct from the administration of the Vatican City State. The Vatican City governorate oversees the Vatican museums, the Vatican gardens, and the gendarmerie. The Vatican City governorate ran a surplus amounting to more than $68.9 million. This is almost triple the surplus of 2013. The Holy See press office said this was due to “to continued strong revenue from the cultural activities (especially the Museums) and favorable movements in investments.” The Council for the Economy provides guidelines to the Secretariat for the Economy, which in turn oversees all Vatican departments and the Vatican City State administration. Cardinal George Pell heads the secretariat. Previously the Prefecture for Economic Affairs was in sole charge of financial oversight of the Vatican City State and the Holy See. The prefecture is expected to be absorbed into the secretariat under a reorganization which is in process. The Prefecture for Economic Affairs prepared the latest financial statements. The Secretariat for the Economy, the Council for the Economy’s audit committee and an external auditor reviewed the balance sheet. New assets and liabilities are part of the properties and funds of the Pontifical Councils and Congregations that were off of the final balance sheet. They were managed directly by the Vatican dicasteries and were part of the sole balance sheet of those bodies, a source in Vatican finances explained to CNA July 16.   According to the Holy See Press Office Bulletin, Holy See assets “previously off the balance sheet amounted to $1.2 billion, while liabilities amounted to almost $242 million.”   According to CNA’s source, these assets will remain available at the dicasteries. They will not be used to ‘refill’ the Holy See finances and help them break even.   “The assets are within the balance sheet as the Secretariat for Economy has to control overall Vatican finances, and because this is what is required by financial transparency international standards, but this does not mean that the assets become property of the Holy See,” the source maintained. The 2013 and 2014 accounting standards for the Holy See’s spending differ somewhat due to several factors, including consolidations and other adjustments. Had the 2014 standards been applied to year 2013, that years’ Holy See deficit should have amounted to something more than $43 million. The main Holy See sources of income in 2014 have been the Institute for Works of Religion contribution ($54.4 million) and the $22.8 million dollars coming from local Churches, which are called to contribute to the universal Church under canon law.   According to the Holy See Press Office, the improvement in 2014 was “largely due to favorable movements in investments held by the Holy See.”   It is not yet disclosed which investments these are. A Vatican Asset Management office intended to gather all investment policies of Vatican financial entities has not yet been established. The Holy See’s most significant costs were the expenses for its approximately 2,880 staff across 64 Vatican entities under consolidation. These expenses totaled over $137 million in 2014.   Under the Vatican financial reorganization, the Prefecture for Economic Affairs will be absorbed by the Secretariat for the Economy. Among prefecture’s main tasks is the transition to the International Public Sector Accounting Standards. The transition will likely take several years.   The Secretariat is already working on 2015 financial statements, which will be the first statements prepared under the new financial management policies. The new policies also require an estimated budget, which the Vatican’s financial entities have already submitted.   According to the Vatican press office, the Council for the Economy has received a detailed budget submission from the secretariat. “The submission highlighted proposed activities as well as anticipated revenue and expenditure for the coming year and included specific recommendation for each of the 136 entities of the list.”   Despite the fiscal improvements shown in the latest financial statements, the budgets indicate that recent years’ deficits “are likely to continue in 2015.”