Vatican treasurer Cardinal George Pell has said the Catholic Church has made "enormous mistakes" in dealing with claims of sexual abuse.
He gave evidence from Rome via video link to an Australian inquiry into child sex abuse.
Cardinal Pell, Australia's most senior Catholic, was asked whether he knew if paedophiles were active in churches under his watch.
"I'm not here to defend the indefensible," said Cardinal Pell.
"The Church has made enormous mistakes and is working to remedy those but the Church in many places, certainly in Australia, has mucked things up, has let people down," he said.
Cardinal Pell, who is not accused of sexual abuse, denied knowing about paedophile priests who were active in the Ballarat diocese during his time there as a priest in the 1970s and 1980s.
Analysis: Phil Mercer, BBC News, Sydney
For the best part of four hours, Cardinal George Pell was in the global spotlight, and the intense scrutiny will continue for at least two more days.
Raking through memories stretching back decades, this was a forensic examination of what Australia's most prominent Catholic official did or didn't know about paedophile priests preying on the innocent in Ballarat in the 1970s and '80s.
Cardinal Pell has strenuously denied any wrongdoing, mostly handling the inquisition in the elegant surrounds of Rome's Hotel Quirinale calmly, although his patience appeared to wane as the night wore on.
He said child abuse perpetrated by members of the clergy in Australia was a "catastrophe", and that many victims had suffered in a "terrible way."
But was the Vatican's money man being truly conciliatory or evasive? Opinion will be split, and the days ahead promise to be emotional and contentious.
The Royal Commission into Institutional Responses to Child Sex Abuse is holding its second round of inquiries into child sex abuse that occurred in the city of Ballarat in Victoria state.
Cardinal Pell was a priest in Ballarat and lived in a seminary with a notorious paedophile priest, Gerald Ridsdale, in the early 1970s.
Ridsdale committed more than 130 offences against young boys while working as a chaplain at Ballarat's St Alipius school between the 1960s and the 1980s.
Even though Cardinal Pell is not facing criminal charges, detractors have questioned the extent of his knowledge of child abuse, and say it could make his Vatican position untenable.
In his testimony, Cardinal Pell did admit to hearing "fleeting references" and rumours of "eccentricities" regarding Christian Brothers - priests teaching at Catholic schools.
He was also critical of the former bishop of the Ballarat diocese, Ronald Mulkearns, who allegedly moved paedophile priest Gerald Ridsdale from parish to parish.
The cardinal said Bishop Mulkearns' actions were "a catastrophe for victims and the church".
"If effective action had been taken earlier an enormous amount of suffering would have been avoided," he said.
Abuse survivors have flown to Rome to face the cardinal, who was excused from returning to Sydney due to ill health.
Gerald Ridsdale's nephew David Ridsdale, a victim of abuse, told reporters in Rome that he was pleased with Cardinal Pell's "more conciliatory tone", but criticised his "careful selection of words".
The hearing is expected to run at least three days and resumes on Tuesday Australian time.
Cardinal Pell and the Royal Commission
- Cardinal Pell, Australia's most senior Catholic, was appointed inaugural prefect of Holy See finances in the wake of scandals at the Vatican Bank
- He was previously Archbishop of Sydney and before that Archbishop of Melbourne
- He held positions in and around the Victorian city of Ballarat in the 1970s and 1980s
- The Royal Commission into Institutional Responses to Child Sex Abuse was set up in 2012, largely in response to allegations surrounding the Catholic Church
- Cardinal Pell has testified before the commission twice already over matters not related to Ballarat
- The cardinal was excused from attending this round of the hearings due to a heart condition, but critics have accused him of avoiding victims
- A group of victims has flown to Rome to hear his testimony, which will be given from a hotel function room.