Please provide all directives (iacludiag HCO Policy Letters, Executive Directives and similar items) that set forth the amount and method by which the following entities* income is allocated to expenses (i.e. retained for its own uses) or is paid/contributed to CSX or other Scientology-related organisation: (i) CSPSSO; (ii) CSF80; (iii) CSWTJ8; (iv) CSREC; (v) all celebrity centers not included in (i) - (iv) above; (vi) IPT; (vii) NBP; (viii) BPI; and (ix) any Advanced or Saint Hill organisation not already included in a category described above. Please include all ecclesiastical organisations within the above entities. Where you have provided a directive in response to another question a citation thereto is sufficient response.
* * * *

Attached are copies of the directives that give the amount and method by which income is allocated to expenses for each of the listed corporate entities. (Exhibit III-4-A). The directive in each case is an International Finance Executive Directive entitled "FBO ALLOCATION FORM - _ _ _ ^ [org name]". Each directive applies to a particular ecclesiastical organization. Since higher level church corporations often house two or more ecclesiastical organizations, two or more directives may apply to a particular church corporation. For your information, attached to each directive is a model of the actual form that is completed by the ecclesiastical organization's Flag Banking Officer each week. The ecclesiastical organizations within each of the above entities and the directive that is applicable to each, are as follows:

(i) csrsso;

(ii) csrSQ;


CSU>.0d U-4-93

i 5 3 g i 3

liii) cswus;

(for Advanced Organization Los Angeles) b. Int Finance ED 379 FBO ALLOCATION FORM - ASHOs (for American Saint Hill Organization Day and Foundation orgs) Int Finance ED 383 FBO ALLOCATION FORM - CLASS V ORGS (for San Diego Class V org) FBO CLO ALLOCATION FORM (for Continental Liaison Office Western US)



a. Int Finance ED 386 FBO ALLOCATION FORM - NON-US SEA ORG ORGS (for Advanced Organization Saint Hill UK) Int Finance ED 380 FBO ALLOCATION FORM - SAINT HILL FDN (for Saint Hill Foundation org) For UK Class V orgs - see Int Fin ED 383, above. all Celebrity Centers not included in (i) Int Finance ED 385 FBO ALLOCATION FORM - CC INT For other Celebrity Centre orgs - see Int Finance ED


c. (v) a. b.

- (iv) above;

fvi) IPT;
IPT's only source of income is advances from Scientology International Religious Trust to cover its de minimis annual expenses. It does not allocate or otherwise pay funds to CSI or any Scientology-related entity, and there is no directive pertaining to any such allocation or payment.



11 493




(vii) NEP;
a. Int Finance ED 389 NEW ERA PUBLICATIONS - FBO ALLOCATION FORM (viii) BPI: a. Int Finance ED 388 BRIDGE PUBLICATIONS - FBO ALLOCATION FORM (ix) any Advanced or Saint Hill organization not already included in a category described above.

See Int Finance ED 386, FBO ALLOCATION FORM - NON-US SEA ORG ORGS, above. The saae form applies to both Advanced Organization Saint Hill Europe & Africa (AOSH EU), and to Advanced Organization Saint Hill Australia, New Zealand & Oceania (AOSH ANZO), which are the only two other AOSHs not included above.

CSI Prod 11-4-93


QUESTION 4-C 4o. Please provide a list and explanation of the income and expense categories, as vail as balance sheet accounts.
* * * *

Attached as Exhibit III-4-B are the lists and explanations of the income categories and the expense categories. These income and disbursement categories are in general use throughout Scientology. These categories cover the most common sources of income and most common types of disbursements found in most Scientology churches ministering religious services. Additional categories are generally created locally as needed for other types of activities found within different types of Scientology organizations, such as Management organizations, Publications organizations, etc. There is no single chart of balance sheet accounts issued for all Scientology organizations across the world to use for all their balance sheets. However, there are standard balance sheet groupings of assets and liabilities. In church organizations that prepare their balance sheets using a local computer program, local charts are developed tailor-made to their needs assigning specific numbers to the general and specific asset and liability accounts. Attached as Exhibit III-4-C is a chart of the different balance sheet accounts used by many United States Scientology churches. Not every individual organization necessarily will use all or even most of the listed accounts; the chart also does not list balance sheet accounts that are unique to individual church organizations.




TRAINING AND PROCESSING This income category account* for receipta associated with the ministry of raligious sarvicas to parishionara. Within this category ara savan subcategories: 1A IB 1C ID IE IF 1G NOTS, SOLO NOTS AND LEVELS ABOVE OT VII ADVANCED COURSES TRAINING PROCESSING QUAL BASIC COURSES FREELOADERS BILLINGS: Staff members who enter into a staff contract are entitled to participate in religious aervices at their employing church without making any donation. If a contracted staff member leaves the church's employ before completing his or her contracted term of aervice, he or ahe will be billed for some or all of the requested donations for the religious services he or she received while on staff. Although legally enforceable, such debts ara enforced only through ecclesiastical means: a former staff member generally will not be permitted to participate in additional religious services until the debt is satisfied. (Debit/Credit Breakdown only). Collections on Freeloader Billings are accounted for under Income Category Code 6B.

This category does not include prepayments received or credit collections, which are accounted for under Income Category Code Number 6. BOOKSTORE SALES 2A BOOKSALES: This income category accounts for all salaa of books, tapes, packs, insignia, bulletins, worksheets and any other tangible items other than meters and acceasories. METER SALES: This income category accounts for all aalaa of E-meters and accessories. MEMBERSHIPS: This income category accounts for payment* for H I Want to Go Clear Club" or the "OT Club" memberships. FSM COMMISSIONS RECEIVED: This income category accounts for fundraiaing (FSM) commissions received from other orgs, e.g., from Flag or an Advanced Org Ex. III-4-B

2B 3 4



DONATIONS: This income category accounts for contributions for any purpose not associated with ministry of religious services or purchase of religious materials.

MEMBERS ACCOUNTS 6A ADVANCED PAYMENTS (APs)/PREPAYMENTS RECEIVED (PPR): This income category accounts for donations received in advancs of participation in religious services by the contributing parishioner. CREDIT COLLECTIONS: This income category accounts for payments received on crsdit and collsctions from former staff. DEBITS/CREDITS: The total of the Debit/Credit Breakdown goas in this category.



D I S B U R S E M E N T CREDITS: This income category accounts for all monay racaivad which offsats or reimburses a disbursement e.g., phone money, photocopies paid for, returned mission and travel expenses, etc. The relevant disbursement code is added, for example, a return of phone money advanced would be 7/07. Other subcategories are:

7/03A 7/22 7/22A 7/23R 7/2IP 7/24 7/24A

FSM AWARDS: Awards credited directly to FSMs' Accounts. (Debit/Credit Breakdown only). BANK CHARGES: Bank charges deducted from deposits on credit side of bank statement BANK INTEREST RECEIVED EXCHANGE DIFFERENCES AND REALIZED GAINS ON CURRENCY CONVERSIONS EXCHANGE DIFFERENCES (UNREALIZED) BOUNCED CHECKS — NO DEBIT/CREDIT

COLLECTIONS OUT (MINUS FIGURE): Cheeks, foreign currency bank drafts, or Letters of Transfer which have to be sent out for collection before they can be credited by the bank on the bank statement. These amounts sometimes are not deposited immediately, or, if not deposited, are not immediately creditable to the church*s account. Because the invoiced amounts have been counted as income, amounts must be subtracted using this category (Collections Out) so that the bankings (deposits) reconcile with the income -2-




Loans. 9A LOANS RECEIVED: A suffix code is used to indicate ths source from which ths loan has bssn rscsivsd. Examples: 9A BANK meaning a loan received from the bank; 9A CSRT means a loan received from CSRT (Church of Scientology Religious Trust). LOAN REPAYMENTS RECEIVED: A suffix code is used to indicate the person or org repaying a loan. CONTRAS: This income category accounts for all income items which have an offsetting disbursement. CONTRAS - OVERLAP PRIOR: Contra which matches a disbursement (contra) from a prior period. CONTRAS - OVERLAP FORWARD: Contra which matches an amount to be disbursed in a future period.

9B 10 10A 10B

Bounced checks collected/ Collections In
11 11A BOUNCED CHECKS COLLECTED BOUNCED CHECKS/BOUNCED CHECKS COLLECTED: Debits to parishioner accounts for checks returned for insufficient -3-


funds, and credits to parishioner accounts for such checks latsr collsctsd. (Debit/Credit Brsakdown only.) 11B COLLECTIONS IN: Credits for moniss collsctsd from chsclcs, bank drafts and lsttsrs of transfsr prsviously ssnt out for collection (sss category 7/24A). REPAYMENTS DEBITS: Debits to parishioner accounts for repayments made. (Debit/Credit Breakdown only. INTER-ACCOUNT TRANSFERS: This income category accounts for transfers of funds to one org bank account from another bank account within the same org. INTER-ACCOUNT TRANSFERS FROM OVERSEAS OR RESERVE ACCOUNTS INTER-ACCOUNT TRANSFERS - OVERLAP PRIOR: This income category accounts for any inter-account transfer which matches a disbursement from a prior period. INTER-ACCOUNT TRANSFERS - OVERLAP FORWARD: This income category accounts for any inter-account transfer which matches a disbursement from a later period. INTER-ORG TRANSFERS: This income category accounts for payments from other church organizations that are part of the same corporation. This category does not include any payments which come from outside the corporation; those go in category 15. A suffix code is used to indicate the org or unit within the corporation from which the payment has been received. Example: 14-AOLA would signify an Inter-org transfer from AOLA to another org within CSWUS. Inter-org transfers are separately categorized for each separate church org within the corporation. CONTRIBUTION FROM OTHER ORGS: This income category accounts for all contributions from orgs that are not in the same corporation as the recipient org and which are not covered under one of the other income categories. OTHER/SUSPENSE: This income category is used for any receipt that does not fit under any other category; each such item is separately scheduled. This category also is used temporarily for unidentified items while the missing data is being obtained. RENTAL INCOME CANTEEN RECEIPTS: This income category accounts for receipts from the canteen, vending machines, laundromat and pay phone commissions. -4-

12 13

13A 13B





30 31

GSl Piod




ROOM AND BOARD: This income category accounts for cash receipts for room and food, whether room by itself and food by itself, sale of meal tickets, restaurant receipts, etc. INSURANCE CLAIMS LEGAL COSTS AWARDED

33 34


CSI Prod 11 4 93




PURCHASES FOR RESALE: This disbursement category accounts for books, tapes, E-Meters and accessories purchased for resale in church bookstores. SALARIES: This disbursement category accounts for salaries, commissions and bonuses paid to staff, including any federal and/or state withholding taxes withheld from compensation. FSM COMMISSIONS COMMISSIONS AND AWARDS: This disbursement category accounts for commissions other than FSM commissions and any non-monetary awards. POSTAGE AND CARRIAGE/FREIGHT CHARGES: This disbursement category accounts for postage and carriage incurred in the ministry of religious services and dissemination of the Scientology faith. Shipping on books and meters purchased for resale are accounted for under Disbursement Category 1. RENT: This disbursement category accounts for amounts paid for use of real property. Rent for cars, machines or equipment are accounted for under separate categories,. Security deposits are accounted for under Disbursement Category 29 and do not become a rent expense unless they are actually used to pay rent. Rent for outside staff berthing facilities is accounted for under Disbursement Category 14. INSURANCE: Examples: fire, general liability, workers compensation, disability, etc. This category does not include auto insurance which is accounted for under Disbursement Category 16. PROPERTY TAX, RATES, ETC.: This disbursement category accounts for all real estate or personal property taxes (called General Rates, in the United Kingdom), licenses, permits, other taxes and minor fees. Sales tax/value added tax or payroll taxes withheld are accounted for under Disbursement Categories 35 and 2, respectively. UTILITIES (LIGHTING, HEATING 6 WATER): This disbursement category accounts for deposits of less $100.00. Deposits in excess of $100 are accounted for under Disbursement Category 29.


3 3A






CSI Prod



7 8

TELEPHONE, TELEX, FAX & PAGERS REPAIRS AND MAINTENANCE: This disbursement category accounts for general upkeep of premises and equipment, including supplies like paint, nails, tools. Auto rapairs are accountad for undar Disbursement Category 16. Capital expenditures to increase the value of premises or equipment ara accountad for undar Disburseaent Category 27a. CLEANING AND LAUNDRY OFFICE AND ADMINISTRATIVE EXPENSES: This disbursaaant category accounts for office supplies, graph paper, office machine supplies, office reference books, vending aachine expenses, and similar recurring expanses that do not fit undar any othar category. HIRE (LEASE) OF EQUIPMENT: This disbursaaant category accounts for hiring or laasing charges on equipment such as offica equipment, whare ownership remains with tha lessor. Installment purchases ara accountad for separately undar Disbursaaant Category 41. DISSEMINATION EXPENSES: This disbursaaant category accounts for axpenses incurrad to proselytize Scientology, including public events. PRINTING AND STATIONERY: An acquisition of new printing equipment would ba accounted for undar Disbursaaant Category 27B. STAFF WELFARE (SEA ORG ORGS category accounts for staff medical/dantal costs, child accordad aaabars of tha Saa only): This disbursaaant food, uniforms, berthing, cars, and similar banafits Org.

9 10






SERVICE COMPLETION AWARDS: This disbursaaant category accounts for saall awards to parishionars upon coaplation of particular raligious services. TRAVEL AND TRANSPORTATION EXPENSES: This disbursaaant category accounts for all transportation and lodging axpansas for staff aaabars travailing on org business, whathar locally or out of town. This disbursaaant category also includas costs associated with operation of vehicles owned by tha org (vehicle ragistration and insurance, rapairs, etc.) Travel costs for staff to participate in raligious services at othar orgs ara accountad for under this catagory-, but thair living axpansas while attanding coursas out-of-town ara accountad for undar Disbursaaant Category 38 (Staff Training Expenses). Purchase of -2-


CSI Prod 11-4-S3


automobiles is accounted for under Disbursement Category 27E. Transportation costs directly connected with public events (for example, airfares for speakers; local transport for attending parishioners and guests) are dissemination expenses accounted for under Disbursement Category 12. 17 18 SCHOLARSHIPS: This disbursement category accounts for stipends or study allowances awarded to parishioners. LEGAL AND PROFESSIONAL: Professional fees paid in connection with the purchase of real property are accounted for under Disbursement Category 27A. AUDIT AND ACCOUNTANCY COURSE MATERIALS: This disbursement category accounts for materials purchased for use in connection with religious services rather than for resale. INTEREST mortgage interest mortgage Category PAID: This disbursement category accounts for interest, late payment charges on mortgages, and on late tax payments. The principal portion of payments is accounted for under Disbursement 30.

19 20


22 23R 24 25

BANK CHARGES AND INTEREST EXCHANGE DIFFERENCES 6 REALIZED LOSSES ON CURRENCY CONVERSION BOUNCED CHECKS: This disbursement category accounts for debits for checks returned for insufficient funds. REPAYMENTS (OF ADVANCED PAYMENTS): This disbursement category accounts for return of all or part of an advanced payment to a•parishioner or the transfer of his or her advance payment to another org, where the parishioner did not participate in the religious services with respect to which the advance payment was made. REFUNDS: This disbursement category accounts for donations returned to a parishioner who has participated in the religious services with respect to which the donation was made.


FIXED ASSETS: This disbursement category includes various sub-categories for items of lasting value which have a life of more than one year. This category does not include items of personal property -3-

CSi Prod





purchased for lass than $100.00 irrespective of their ussful lives. This category also includes sales tax and shipping costs involved in the purchase of the specified assets. 27A PURCHASE OF LAND AND BUILDINGS (REAL ESTATE OR PROPERTY): This disbursement category accounts for the original purchase cost of land and buildings and associated professional fees. Inventory, furniture and/or equipment within purchased real property are accounted for under Disbursement Categories 27 B-D).

27A1 LAND AND BUILDING IMPROVEMENTS: This disbursement category accounts for improvements to existing real property and all costs of self-constructed buildings. 27B PLANT AND TECHNICAL EQUIPMENT: This disbursement category accounts for boilers, central heating, sprinkler systems, electrical wiring and installations, water and sewer lines, plumbing fixtures, printing equipment, computers, tape recorders, film projectors, address equipment, agricultural equipment, catering equipment, and similar property. FURNITURE, FIXTURES AND FITTINGS: This disbursement category accounts for desks, chairs, tables, carpets, curtains, beds, bathroom fittings, picture frames and photographs/paintings, busts, light fixtures and anything fitted to or on walls, floors and ceilings. OFFICE EQUIPMENT MOTOR VEHICLES


27D 27E

LOANS, 28A 28B LOANS BY THE ORG TO OTHER ORGS (OR INDIVIDUALS) LOAN REPAYMENTS FROM THE ORG TO OTHER ORGS OR CORPORATIONS: Payments on mortgage loans are accounted for under Disbursement Category 30. DEPOSITS OR SECURITY MORTGAGE LOAN REPAYMENTS: Mortgage loan interest is accounted for under Disbursement Category 21. CONTRAS: This disbursement category accounts for bank debit errors or corrections, relays of monies received for (or on behalf of) another organization which are now being disbursed to the proper recipient, and any payment which offsets a contra income item received. (Note The Contra amount on the Income and Disbursements Summaries must agree exactly, after taking into account any outstanding contra items, prior or forward.)

29 30 31




INTERNAL TRANSFERS (INTER-ACCOUNT TRANSFERS): This disbursement category accounts for money transferred from one account to another. The major portion of entries in this category will be the weekly allocation from the orgs Finance Office Number 1 account to the various operating accounts. TRANSFERS TO DEFENSE OR OVERSEAS ACCOUNTS SUSPENSE: This disbursement category is used temporarily for items as yet unidentified. SALES (VALUE ADDED) TAX PAYMENTS: Sales tax paid on purchases remain part of the disbursement for the item. PAYMENTS TO FLAG: This disbursement category accounts for all payments to Reserves; each separate payee is shown separately. FLAG EXTERNAL EXPENSES PAYMENTS: This disbursement category accounts for all payments made by an org in connection with an on-site assistance from a superior ecclesiastical org. Payments are made against an authorized Flag External Purchase Order. STAFF TRAINING: This disbursement category accounts for payments to other orgs for training of staff, including room and board and/or subsistence allowances. INTER-ORG TRANSFERS: This disbursement category accounts for payments to other church organizations that are part of the same corporation. This category does not include any payments to any org outside the corporation; those go in category 40. A suffix is used to indicate the org or unit within the corporation to which the payment has been made. Example: 39-AOLA would signify an Inter-org transfer to AOLA by another org within CSWUS. Inter-org transfers are separately categorized for each separate church org within the corporation. (This is the disbursement counterpart to Income Category 14). CONTRIBUTIONS TO OTHER ORGS: This disbursement category accounts for transfers to other orgs/units that are not part of the same corporation as the paying org and which do not fall under any other disbursement category. HIRE PURCHASE (OR INSTALLMENT CONTRACT) PAYMENTS: Payments

33 34 35 36






made for equipment purchases made on time payment basis.


CSl Prod 11-4*3


42- Film lease payments: this disbuirsment category accounts for payments made to pay for usage of othre scientology films 43 - Tech licencing fees: this disbursment category accounts for any contractual payments for usage of technical materials (e.g. advance technology licence fees)

CSI Prod








ACCOUNT NUMBER ACCOUNT NAME 1009 Cash Non Interest Bearing Accounts 1010 cash 1011 Cash-in-Transit 1012 Cash Float 1015 Pracious Matals 1020 SORMS 1030 Inventory 1040 Cartificata of Daposit 1041 Lattar of Cradit 1042 Traasury Bonds 1045 Prapaid Fadaral Tax - Backup Withholding 1050 Stock 1051 Bonds 1052 Lagal Sacurity Bond 1053 Prapaid Bond Intarast 1055 Daposits on Fixad Assats 1056 Daposits on Hatar Mold 1065 Building 1069 Accum Daprac-Buildings 1070 Land 1072 Land Improvements 1073 Accum Deprec-Land Improvamants 1074 Land Improvamants in Progress 1075 Construction in Progress 1076 Assets not Placed in Service 1078 Building Improvements 1079 Accum Depr-Building Improvements 1080 Leasehold Improvements 1090 Accum Depr-Leasahold Impr 1100 Computer t other 5 yr Equip 1105 Accum Depr-5 Yr Equipment 1110 Fura/Equip 7 Yr (5 Yr Pre-87) 1117 Trademark Costs 1120 Accum Oepr-Furn & Equip 1125 Other Fixed Assets 1130 Accum Depr-Other Fixed Assets 1138 Films 1139 Accum Amort - Films 1140 Other Assets 1150 Motor Vehicles 1160 Accum Depr-Vehicles 1162 Heavy Equip t Buses (5 Yr) 1164 Accum Depr-Heavy Equip 6 Buses 1-170 Software Development 1171 Trademark Costs

Ex. III-4-C

CM P* 3 W M


1172 1173 1174 1175 1176 1177 1178 1180 1183 1185 1189 1190 1191 1192 1193 1319 1320 1321 1322 1327 1330 1331 1332 1333 1334 1335 1336 1367 1410 1411 1412 1413 1420 1952 2010 .2020 2030 2031 2040 2048 2050 2053 2055 2057 2058 2059 2060 2065 2066 2067

Trademark Coata-Non-Amort Softwara not placad in Sarvica Softwara Purchaaad Accum Amort-Softwara Oaval Accum Amort-TM Coata Accum Dapr-Purchaaad Softwara Accum Amort - Othar Aaaata Loan Racaivabla Contra Racaivabla Aceounta Racaivabla Loan Rac - Mortgagaa Loan Rac - Staff Raaarva for Bad Dabta Diacount On Mortgaga Notaa Accumulatad Mortgaga Intaraat Notaa Racaivabla Dapoaita Salaa Tax Dapoait Rantal Dapoaita from Rantara Eacrow Dapoait Prapaid Expanaaa Prapaid Taxaa Prapaid Licanaing Faaa Royalty Advancaa Prapaid Mgmt Faaa to CSI Organizational Costa Accum Amortization - Org Coata Capital Invatmt in Subaidiariaa Righta Accum Amort - Righta Dafarrad Intaraat Unraalizad Exch Loaa (Gain) Dafarrad Intaraat Lagal Bond Inatallmant Cont Payabla Computar Liability Loan Payabla Rantal Dapoaita Bonda Payabla Salaa Tax Payabla Notaa Payabla Sattlamant Payabla Dapoaita Payabla Salary Payabla Salaa Tax Payabla Payroll Taxaa Payabla Aceounta Payabla Dafarrad Racaipta Contraeta Payabla Cuatomar Dapoaita

CSI Prod H-4-83

1 5 4 Q 4 i

2069 2070 2071 2072 2075 2080 2081 2100 2125 2189 2200 2240 3000 3005 3010 3020 4020 4021 4022 4023 4024 4025 4027 4028 4030 4031 4035 4040 4050 4060 4061 4065 4066 4067 4068 4069 4070 4080 4085 4090 4100 4101 4102 4103 4104 4105 4107 4110 4113

Installment Sal* Leases Payabla Royaltiaa Payabla Licanaing Faas Payabla Mortgagaa Payabla Contra Owing Intar-Account Owing Loan Payabla Accdunts Payabla Accruad Intaraat Payabla Dafarrad Rights Income Program Commitmants (Surplus)oaficit Adjustmants to Equity Paid-in Capital Prior Yaar Film Capital Adj Raaalabla Itams Uniform Salas Incoma Cantaan 6 Bookstore Bookstore sales Meters and Accessories Meter Repairs Subscription Income Projector Repairs Members Accounts Members Accounts - Accommodations Memberships FSM Commissions Donations Interest Mortgage/Loan Interest Dividends Capital Gains Rights Income Bad Debt Income Insurance Claim Proceeds Investment Income Cash Over/Under Suspense OT Club Income Dissem Products Advertising Income Starter Packages Mailing List Income Consulting Income Issue Authority Service Room and Board Miac. Income Canteen Commissions -3-

CSI Prod 11-4-H

1 5 4 0 4


4114 4115 4117 4118 4119 4120 4121 4122 4123 4124 4127 4128 4129 4130 4135 4140 4141 4150 4155 4156 4160 4161 4162 4172 4175 4190 4195 4200 4430 4440 4441 4442 5010 5011 5012 5020 5021 5030 5032 5033 5034 5040 5041 5042 5043 5050 5060 5061 5070

Canteen Income Freeloader Collections Rental Income Telephone Commission* Laundry Machine Income Computer Services Computer Software Sales Accommodations Vending Commissions Conventions Room, Board and Childcare Staff Movies Income Computer Hardware Sales Training & Processing Advanced Tech Licensing Fees Management Payments Tithes Marketing Products Video Production Reimbursement Event Production Reimbursement Film Sales/Licensing Fees Video Services Mission l%s for Cont Distributions Received Contributions Bounced Checks Collected Prior Year Income credit Collected Legal Costs Awarded Royalty Income Licensing Fee Income Distribution fees Purchases for Resale Bulk Uniform Purchases Canteen Purchases Compensation of Officers Compensation of Dirs a Trustees Salaries & Allowances Parsonage Allowance Prior Year Salary Payroll reimbursement FSM Commissions Broker Commission FOLO FSC Exps Sums Commissions and Awards Postage & Carriage Rent Permits & Licenses Occupancy -4-

CSIr Prod 11-4-93


5080 5100 5110 5120 5122 5130 5140 5150 5160 5161 5170 5190 5200 5201 5202 5203 5210 5215 5220 5230 5240 5241 5242 5245 5249 5250 5259 5260 5265 5270 5280 5284 5286 5287 5290 5300 5301 5310 5315 5320 5331 5335 5340 5345 5361 5380 5390 5400 5401

Utilities Insurance Telephone Office 6 Admin Production Supplies Hire of Equipment Rental and Maintenance Cleaning a Laundry Rapaira t Maintananca Rant, Ratas t Insurance Dissemination Printing 6 Stationary Staff Welfare Public Food Rastaurant Hotal Public walfara Church Walfara Sarvica Completion Awards Donations cash Float Traval t Transport Expense Allowance Food VISA account Tours Expenses Mission Expenses Research Mission Legal a Professional Legal Settlements Audit & Accountancy Course Materials Film Licensing Fees Licenses, Fees and Dues RTC Adv Tech Lie Fees Bank Charges Staff Training Scholarships Contrib to other Orgs Grants-Social Betterment Groups Estates Distribution fees Consultancy Interest Ecclesiastical Guidance CSI Distributions Memberships Miscellaneous Ecclesiastical Tech Serv RTC Film Royalties -5-

C V Prod 11 4 93 154044 S

5402 Royalties 5403 Licensing Fees 5410 Exchange Diffsrsncss 5415 Thaft Loss 5417 Bad Oabt Expanse 5420 Salas Tax 5430 Bounced Checks 5435 Collection Items In/Out 5440 Repayments 5445 Refunds 5450 Depreciation Expense 5451 Depreciation - Prior Year Adj 5452 Section 179 Expense 5455 Amort Expense - Software Devel 5456 Amort Expense - TM Costs 5457 Amort Expense - Rights 5458 Film Amortization 5459 Prior Year Payroll Taxes 5460 Taxes 5461 Fed Corp Tax 5462 State Corp Tax 5463 Amortization 5470 Penalties 5472 Travel 6 Entertainment 5475 Donations 5480 Contras 5490 Inter Account Transfers 5500 Inter Org Transfers 5519 Theft Loss 5520 Gain/Loss on Sale/Disposal 5522 Gain/Loss on Sale Land/Bldgs 5525 Realized Gain/Loss on Invstmts 5526 Paper Gain/Loss on Investments 5527 Gain/Loss on Mortgage loans 5528 Prior Year Sales Tax Paid 5529 Prior Year Payroll Taxes 5530 Partnership Loss 5580 Film Production Expenses 5581 Video Non-Resale Prod Exps 5582 Film & Equipment Unit Expenses 5583 Audio Visual Unit Expenses 5584 Transfer to Film Capitalization 5585 Transfer to Inventory Capitalization 5750 Research t Development The 6000's, 7000's, 8000•s and 9000's are generally used for the various inter-org transfers amongst ecclesiastical organizations within one corporation, so that they can be easily traced and reconciled for elimination on consolidation.
• • • t



Questions 4(e) and 4(f) •• Please describe whether, and, if so, the extent to which, payments for services rendered at Church of Scientology Flag Service Org, Inc. (hereinafter "CSFSO") and Church of Scientology Flag Ship service Organization (hereinafter "CSFSSO") vera and are not deposited or held in a United States bank account prior to being deposited abroad as of December 31, 1986 and since than. Does this vary depending upon either the form of payment (e.g. check, cash, credit card) or the domicile of the individual paying such amounts? Please describe in detail the treatment of such funds (i.e. the path of such payments) as of December 31, 1986 as well as any changesin such treatment to the date of this letar. Please describe in detail the mechanism by which payments by United States residents and funds for services performed in the United States by any other Scientology-related organizations in calendar year 1989 were deposited in overseas accounts (e.g., describe the physical transfer of funds overseas, including the mode of transmittal, etc.). Did this vary depending upon the form of payment? Please describe any changes since then up the present time? f. In the previous paragraph, please modify the question by substituting the term "donations and/or contributions" for the word "payments" or "funds". Is the answer different? If so, please explain. Questions 4(e) and 4(f) are being answered together because the manner in which Churches of Scientology handle receipts of funds does not differ based on whether the payments are considered as payments for goods or services or as donations or contributions. Because of the structure of the questions, responses are provided first for CSFSO and CSFSSO. U.S. Churches of Scientology receiving funds in foreign currencies have bank accounts in the U.S. and in other countries in order to facilitate receipt and clearing of payments. Through experience, they have found that overseas banks are able to clear foreign currency payments much faster than U.S. banks, offer foreign currency bank accounts that are not available in the U.S., provide better currency conversion rates into U.S. dollars than do U.S. banks, and impose lower service charges. Church of Scientology Flag Service Organization Church of Scientology Flag Service Organization ("CSFSO"), is an international religious retreat located in Clearwater, Florida. It is the largest single Church of Scientology in the world and offers Scientology religious 4-26

services from the lowest levels to more advanced levels. CSFSO attracts parishioners from all over the world and receives donations for religious services in many different currencies. Its procedures for deposit of its receipts, discussed below, have been in force since before 1986 and remain unchanged today. CSFSO ordinarily does not deposit foreign-denominated funds in the U.S. for transfer abroad. Rather, CSFSO deposits foreign currency checks or receives bankwires in foreign currencies directly into its overseas bank accounts. CSFSO physically sends the foreign-denominated instruments at least weekly by common carrier (DHL, Federal Express, etc.) to its various overseas banks for deposit into CSFSO's accounts. These procedures apply whether the foreign checks are received from the parishioner while he or she is at CSFSO in Florida, or whether he or she is remitting a payment directly to CSFSO abroad. Checks in U.S. dollars drawn on foreign banks similarly are deposited in CSFSO's U.S. dollar bank account in Luxembourg. This is to facilitate check clearance because CSFSO's principal foreign bank in Luxembourg can clear foreign U.S. dollar checks more quickly than U.S. banks. This procedure applies whether the payment is sent by a parishioner from abroad or paid in person in Florida. Check payments abroad from overseas parishioners usually are collected by Flag Service Consultant ("FSC") Offices in Denmark, France, Switzerland, Germany, UK, Italy, Sweden, Australia, Mexico and Canada. Local CSFSO accounts are kept in Australia, France, Switzerland, Germany, Mexico and Canada. In general, foreign currency checks are sent either by bank wire from local FSC accounts or by courier pack direct to the Luxembourg bank for deposit into CSFSO's account, from countries which do not have a CSFSO local account. Foreign cash received from a parishioner while he is at CSFSO is converted into U.S. dollars and deposited into local accounts in Clearwater. Amounts received from parishioners in U.S. currency, of course, are deposited into local U.S. accounts. This money remains in the U.S. and is not transferred overseas. Most parishioners pay by check, and currency, whether U.S. or foreign, is a very small percentage of funds received. Currency, whether U.S. or foreign, is never sent abroad in a mailpack because of the risk of theft or other loss. CSFSO is able to accept payment by certain credit cards (Visa and Mastercard). All credit card payments are deposited directly into a local U.S. dollar bank account, whether from U.S. or 4-27

non-US parishioners. Credit card proceeds are always in U.S dollars, never foreign currencies. CSFSO also has Reserve accounts overseas in Luxembourg. CSFSO periodically transfers funds from its Finance Office accounts, into which its foreign checks and bankwires are initially deposited, to the Reserve accounts; CSFSO sends its Luxembourg bank written instructions to make these transfers and receives debit and credit memos to confirm these interaccount transfers. On occasion, CSFSO also may transfer by bank wire funds held in U.S. banks to its Luxembourg Reserve accounts if such funds exceed local needs. The reasons for such transfer would include the availability of higher interest rates in Luxembourg and surplus balances in U.S. bank accounts in excess of FDIC limits. Such surpluses in U.S. bank accounts are rare, so there are very few such transfers. Church of Scientology. Flag Ship Service Organization The Church of Scientology Flag Ship Service Organization (CSFSSO) was incorporated in Curacao, Netherlands Antilles as a non-profit foundation in April 1988. It commenced activities on 1 May 1988, shortly before the maiden voyage of the Freewinds on 6 June 1988. Its procedures for handling its receipts, discussed below, have applied since its inception and remain unchanged today. CSFSSO does not have, nor has it ever had, a United States bank account. None of its income has ever been banked in the U,S. CSFSSO has never provided any religious goods or services to its parishioners within the United States; rather, these activities are conducted entirely outside the U.S., from aboard the M.V. Freewinds. CSFSSO has local bank accounts in Curacao, Netherlands Antilles, the home port of the Freewinds. CSFSSO also has U.S. dollar and foreign currency accounts in Luxembourg. CSFSSO accepts payments and donations via major credit cards (e.g. Visa and Mastercard), which are deposited in its local accounts in Curacao. Parishioners in the U.S. who wish to make donations to CSFSSO for religious services usually send payment by check or credit card debit to CSFSSO via the Church of Scientology Freewinds Relay Office, located in Clearwater, Florida. This is a practical expedient because the Freewinds is usually at sea in the Caribbean and its exact location for mail purposes varies. The Relay Office collects all mail and other communications destined


for the Freewinds. Any currency intended for CSFSSO is converted into a U.S. dollar draft or money order; cash is never sent abroad in a mailpack because of the risk of theft or other loss. Every week, the Relay Office forwards all mail, including checks and credit card invoices, to Curacao. If the Freewinds is not in port, the mailpack is collected by a Ship's representative and delivered to the Ship as soon as it arrives. All checks are invoiced by CSFSSO on-board the Freewinds and is deposited into local bank accounts in Curacao, as noted above. Church of Scientology International The Church of Scientology International ("CSI") receives support payments from subordinate Churches throughout the world for its ecclesiastical guidance and other international operations as Mother Church. CSI also receives contributions from its subordinate churches towards the cost of broad public dissemination campaigns, and it collects Film Lease payments per contractual agreements from Churches and, via Scientology Missions International, from Missions. Most support payments to CSI from subordinate Churches are in the form of checks or money orders. However, some U.S. Churches bankwire their payments to CSI's U.S. account in Los Angeles, while some non-U.S. Churches bankwire their support payments direct to CSI's account in Luxembourg. The Continental Finance offices for Western U.S. (in Los Angeles California), Eastern U.S. (New York), Flag (Clearwater, Florida), Latin America (Mexico), Canada (Toronto), UK (East Grinstead), Europe (Copenhagen, Denmark), Italy (Milano), Australia New Zealand (Sydney, Australia) assist in the collection of these payments from their subordinate Churches. These Churches generally forward their checks to their respective Continental Finance office for relay to CSI. These payments almost always are relayed by bankwire. Non-US Finance offices sometimes send checks from their subordinate Churches payable to CSI by courier mailpacks directly to the Luxembourg bank for deposit into CSI's account. The Continental Office in Australia, however, collects funds from each of its subordinate Churches locally and then sends a bankwire directly to the CSI Luxembourg account. Payments other than bankwires and direct deposits to CSI's Luxembourg accounts are sent to CSI in Los Angeles by mail or


courier pack or via inter-organizational mailpacks. In general/ all foreign currency checks and U.S. dollar checks drawn on foreign banks are sent by CSI staff via courier pack (DHL or the equivalent) directly to its Luxembourg bank for deposit into CSI's account. Before 1990, U.S. dollar checks drawn on domestic banks also were sent to CSI's Luxembourg account for deposit there. Since 1990, domestic U.S. dollar checks generally have been deposited into CSI's account in Los Angeles. CSI does not receive payments in cash or by credit card. Primarily for exchange control reasons, CSI has not received payments from Churches in South Africa, Zimbabwe, Israel, Italy, Spain or Portugal, regularly since 1986. Recent changes in exchange control regulations within the European Community, however, mean that periodic payments have resumed or applications are in progress from Italy, Spain and Portugal. An application for exchange control approval to remit funds from South Africa was submitted and has been pending since August 1991. When cleared, these payments are deposited into CSI's Luxembourg bank accounts. Scientology Missions International Since 1989, all Church of Scientology missions have paid a tithe to Scientology Missions International ("SMI"). All tithes to SMI in non-US currency bank drafts or U.S. Dollar checks drawn on banks outside of the United States or Canada have been sent via courier pack (DHL or the equivalent) to SMI's Luxembourg bank for deposit. SMI also sends any excess funds held in its local accounts, or when local accounts exceed FDIC limits, to its Luxembourg bank by writing a check and including it in the deposits to be couriered to Luxembourg. Occasionally, SMI's Continental office in Europe will receive a Mission's tithe and send it directly to SMI's Luxembourg account for deposit. Some of the European Missions also send their payments directly to the SMI Luxembourg account by depositing the funds directly or sending a wire transfer. Because of exchange control laws, tithes from South African Missions cannot be sent to SMI. Consequently, an account was set up specifically for SMI in South Africa, to which South African Missions deposit their tithes directly. The local Finance Director for the Church of Scientology in South Africa assists SMI in maintaining this account by sending telex reports to SMI of the amounts received and deposited in this account.


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