QUESTION 4-a

a. 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;
Int Finance ED 384
FBO ALLOCATION FORM - FLAG SHIP SERVICE ORG
(ii) csrSQ;
a. Int Finance ED 381R
FBO ALLOCATION FORM - FLAG SERVICE ORG
b. Int Finance ED 382
FBO ALLOCATION FORM - FLAG CREW ORG

4-1

CSU>.0d U-4-93 i 5 3 g i 3
liii) cswus;
a. Int Finance ED 378 FBO ALLOCATION FORM - AOLA
(for Advanced Organization Los Angeles)
b. Int Finance ED 379
FBO ALLOCATION FORM - ASHOs
(for American Saint Hill Organization Day and
Foundation orgs)
c. Int Finance ED 383
FBO ALLOCATION FORM - CLASS V ORGS
(for San Diego Class V org)
d. FBO CLO ALLOCATION FORM
(for Continental Liaison Office Western US)
iv.)CSREC;
a. Int Finance ED 386
FBO ALLOCATION FORM - NON-US SEA ORG ORGS
(for Advanced Organization Saint Hill UK)
b. Int Finance ED 380
FBO ALLOCATION FORM - SAINT HILL FDN
(for Saint Hill Foundation org)
c. For UK Class V orgs - see Int Fin ED 383, above.
(v) all Celebrity Centers not included in (i) - (iv) above;
a. Int Finance ED 385
FBO ALLOCATION FORM - CC INT
b. For other Celebrity Centre orgs - see Int Finance ED
383, FBO ALLOCATION FORM - CLASS V ORGS, 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.

4-2

11 493
CSIProd ' !
153914
 (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 153915

 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.

4-5

154028
 SCXEHTOLOGY ACCOUNTS AUDITS
I>CCKE AUDIT CATEGORIES

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 NOTS, SOLO NOTS AND LEVELS ABOVE OT VII
IB ADVANCED COURSES
1C TRAINING
ID PROCESSING
IE QUAL
IF BASIC COURSES
1G 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.
2B METER SALES: This income category accounts for all aalaa
of E-meters and accessories.
3 MEMBERSHIPS: This income category accounts for payment*
for H I Want to Go Clear Club" or the "OT Club" memberships.
4 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
154029
5 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.
6B CREDIT COLLECTIONS: This income category accounts for
payments received on crsdit and collsctions from former
staff.
6C 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 FSM AWARDS: Awards credited directly to FSMs'
Accounts. (Debit/Credit Breakdown only).
7/22 BANK CHARGES: Bank charges deducted from
deposits on credit side of bank statement
7/22A BANK INTEREST RECEIVED
7/23R EXCHANGE DIFFERENCES AND REALIZED GAINS ON
CURRENCY CONVERSIONS
7/2IP EXCHANGE DIFFERENCES (UNREALIZED)
7/24 BOUNCED CHECKS — NO DEBIT/CREDIT
7/24A 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-

154030
 amount on the audit. rNota; when the money is
collected, it is accounted for under Income
Catsgory 11B as a Collection In.)
7/27A RETURNED DISBURSEMENTS - LAND 6 BUILDINGS
7/27AS SALES ON LAND k BUILDINGS
7/27B RETURNED DISBURSEMENTS - PLANT & TECHNICAL
7/27BS SALES OF PLANT & TECHNICAL
7/27C RETURNED DISBURSEMENTS - FURNITURE 6 EQUIPMENT
7/27CS SALES OF FURNITURE 6 EQUIPMENT
7/27D RETURNED DISBURSEMENTS - OFFICE EQUIPMENT
7/27DS SALES OF OFFICE EQUIPMENT
7/27E RETURNED DISBURSEMENTS - AUTOMOBILES
7/27ES SALES OF AUTOMOBILES
8 SALES TAX OR VALUE ADDED TAX (VAT)
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).
9B LOAN REPAYMENTS RECEIVED: A suffix code is used to
indicate the person or org repaying a loan.
10 CONTRAS: This income category accounts for all income
items which have an offsetting disbursement.
10A CONTRAS - OVERLAP PRIOR: Contra which matches a
disbursement (contra) from a prior period.
10B CONTRAS - OVERLAP FORWARD: Contra which matches an amount
to be disbursed in a future period.
Bounced checks collected/ Collections In
11 BOUNCED CHECKS COLLECTED
11A BOUNCED CHECKS/BOUNCED CHECKS COLLECTED: Debits to
parishioner accounts for checks returned for insufficient
-3-

154031
 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).
12 REPAYMENTS DEBITS: Debits to parishioner accounts for
repayments made. (Debit/Credit Breakdown only.
13 INTER-ACCOUNT TRANSFERS: This income category accounts for
transfers of funds to one org bank account from another
bank account within the same org.
13A INTER-ACCOUNT TRANSFERS FROM OVERSEAS OR RESERVE ACCOUNTS
13B INTER-ACCOUNT TRANSFERS - OVERLAP PRIOR: This income
category accounts for any inter-account transfer which
matches a disbursement from a prior period.
13C INTER-ACCOUNT TRANSFERS - OVERLAP FORWARD: This income
category accounts for any inter-account transfer which
matches a disbursement from a later period.
14 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.
15 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.
16 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.
30 RENTAL INCOME
31 CANTEEN RECEIPTS: This income category accounts for
receipts from the canteen, vending machines, laundromat and
pay phone commissions.
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GSl Piod 11-4-S3 154032

32 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.
33 INSURANCE CLAIMS
34 LEGAL COSTS AWARDED

-5-

CSI Prod 11 4 93
154033
 Scientology ACCOUNTS AUDITS
DISBURSEMENT AUDIT CATEGORIES

1 PURCHASES FOR RESALE: This disbursement category accounts

for books, tapes, E-Meters and accessories purchased for
resale in church bookstores.
2 SALARIES: This disbursement category accounts for
salaries, commissions and bonuses paid to staff, including
any federal and/or state withholding taxes withheld from
compensation.
3 FSM COMMISSIONS
3A COMMISSIONS AND AWARDS: This disbursement category
accounts for commissions other than FSM commissions and any
non-monetary awards.
4 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.
5 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.
5A INSURANCE: Examples: fire, general liability, workers
compensation, disability, etc. This category does not
include auto insurance which is accounted for under
Disbursement Category 16.
5B 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.
6 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.

CSI Prod 1993 154034

7 TELEPHONE, TELEX, FAX & PAGERS
8 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.
9 CLEANING AND LAUNDRY
10 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.
11 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.
12 DISSEMINATION EXPENSES: This disbursaaant category
accounts for axpenses incurrad to proselytize Scientology,
including public events.
13 PRINTING AND STATIONERY: An acquisition of new printing
equipment would ba accounted for undar Disbursaaant
Category 27B.
14 STAFF WELFARE (SEA ORG ORGS only): This disbursaaant
category accounts for staff food, uniforms, berthing,
medical/dantal costs, child cars, and similar banafits
accordad aaabars of tha Saa Org.
15 SERVICE COMPLETION AWARDS: This disbursaaant category
accounts for saall awards to parishionars upon coaplation
of particular raligious services.
16 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 154035

 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 SCHOLARSHIPS: This disbursement category accounts for
stipends or study allowances awarded to parishioners.
18 LEGAL AND PROFESSIONAL: Professional fees paid in
connection with the purchase of real property are accounted
for under Disbursement Category 27A.
19 AUDIT AND ACCOUNTANCY
20 COURSE MATERIALS: This disbursement category accounts for
materials purchased for use in connection with religious
services rather than for resale.
21 INTEREST PAID: This disbursement category accounts for
mortgage interest, late payment charges on mortgages, and
interest on late tax payments. The principal portion of
mortgage payments is accounted for under Disbursement
Category 30.
22 BANK CHARGES AND INTEREST
23R EXCHANGE DIFFERENCES 6 REALIZED LOSSES ON CURRENCY
CONVERSION
24 BOUNCED CHECKS: This disbursement category accounts for
debits for checks returned for insufficient funds.
25 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.
26 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
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CSi Prod 11 4 93 154036

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.
27C 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.
27D OFFICE EQUIPMENT
27E MOTOR VEHICLES
LOANS,
28A LOANS BY THE ORG TO OTHER ORGS (OR INDIVIDUALS)
28B LOAN REPAYMENTS FROM THE ORG TO OTHER ORGS OR CORPORATIONS:
Payments on mortgage loans are accounted for under
Disbursement Category 30.
29 DEPOSITS OR SECURITY
30 MORTGAGE LOAN REPAYMENTS: Mortgage loan interest is
accounted for under Disbursement Category 21.
31 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.)

-4-

154037
32 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.
33 TRANSFERS TO DEFENSE OR OVERSEAS ACCOUNTS
34 SUSPENSE: This disbursement category is used temporarily
for items as yet unidentified.
35 SALES (VALUE ADDED) TAX PAYMENTS: Sales tax paid on
purchases remain part of the disbursement for the item.
36 PAYMENTS TO FLAG: This disbursement category accounts for
all payments to Reserves; each separate payee is shown
separately.
37 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.
38 STAFF TRAINING: This disbursement category accounts for
payments to other orgs for training of staff, including
room and board and/or subsistence allowances.
39 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).
40 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.
41 HIRE PURCHASE (OR INSTALLMENT CONTRACT) PAYMENTS: Payments
made for equipment purchases made on time payment basis.

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CSl Prod 11-4*3 154033
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 11-4-93 154039

 QUESTION 4-c
representative chart ACCOUNTs for balance sheets
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 154040
1172 Trademark Coata-Non-Amort
1173 Softwara not placad in Sarvica
1174 Softwara Purchaaad
1175 Accum Amort-Softwara Oaval
1176 Accum Amort-TM Coata
1177 Accum Dapr-Purchaaad Softwara
1178 Accum Amort - Othar Aaaata
1180 Loan Racaivabla
1183 Contra Racaivabla
1185 Aceounta Racaivabla
1189 Loan Rac - Mortgagaa
1190 Loan Rac - Staff
1191 Raaarva for Bad Dabta
1192 Diacount On Mortgaga Notaa
1193 Accumulatad Mortgaga Intaraat
1319 Notaa Racaivabla
1320 Dapoaita
1321 Salaa Tax Dapoait
1322 Rantal Dapoaita from Rantara
1327 Eacrow Dapoait
1330 Prapaid Expanaaa
1331 Prapaid Taxaa
1332 Prapaid Licanaing Faaa
1333 Royalty Advancaa
1334 Prapaid Mgmt Faaa to CSI
1335 Organizational Costa
1336 Accum Amortization - Org Coata
1367 Capital Invatmt in Subaidiariaa
1410 Righta
1411 Accum Amort - Righta
1412 Dafarrad Intaraat
1413 Unraalizad Exch Loaa (Gain)
1420 Dafarrad Intaraat
1952 Lagal Bond
2010 Inatallmant Cont Payabla
.2020 Computar Liability
2030 Loan Payabla
2031 Rantal Dapoaita
2040 Bonda Payabla
2048 Salaa Tax Payabla
2050 Notaa Payabla
2053 Sattlamant Payabla
2055 Dapoaita Payabla
2057 Salary Payabla
2058 Salaa Tax Payabla
2059 Payroll Taxaa Payabla
2060 Aceounta Payabla
2065 Dafarrad Racaipta
2066 Contraeta Payabla
2067 Cuatomar Dapoaita

CSI Prod H-4-83 1 5 4 Q 4 i

2069 Installment Sal*
2070 Leases Payabla
2071 Royaltiaa Payabla
2072 Licanaing Faas Payabla
2075 Mortgagaa Payabla
2080 Contra Owing
2081 Intar-Account Owing
2100 Loan Payabla
2125 Accdunts Payabla
2189 Accruad Intaraat Payabla
2200 Dafarrad Rights Income
2240 Program Commitmants
3000 (Surplus)oaficit
3005 Adjustmants to Equity
3010 Paid-in Capital
3020 Prior Yaar Film Capital Adj
4020 Raaalabla Itams
4021 Uniform Salas
4022 Incoma Cantaan 6 Bookstore
4023 Bookstore sales
4024 Meters and Accessories
4025 Meter Repairs
4027 Subscription Income
4028 Projector Repairs
4030 Members Accounts
4031 Members Accounts - Accommodations
4035 Memberships
4040 FSM Commissions
4050 Donations
4060 Interest
4061 Mortgage/Loan Interest
4065 Dividends
4066 Capital Gains
4067 Rights Income
4068 Bad Debt Income
4069 Insurance Claim Proceeds
4070 Investment Income
4080 Cash Over/Under
4085 Suspense
4090 OT Club Income
4100 Dissem Products
4101 Advertising Income
4102 Starter Packages
4103 Mailing List Income
4104 Consulting Income
4105 Issue Authority Service
4107 Room and Board
4110 Miac. Income
4113 Canteen Commissions

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CSI Prod 11-4-H 1 5 4 0 4 ,

4114 Canteen Income
4115 Freeloader Collections
4117 Rental Income
4118 Telephone Commission*
4119 Laundry Machine Income
4120 Computer Services
4121 Computer Software Sales
4122 Accommodations
4123 Vending Commissions
4124 Conventions
4127 Room, Board and Childcare
4128 Staff Movies Income
4129 Computer Hardware Sales
4130 Training & Processing
4135 Advanced Tech Licensing Fees
4140 Management Payments
4141 Tithes
4150 Marketing Products
4155 Video Production Reimbursement
4156 Event Production Reimbursement
4160 Film Sales/Licensing Fees
4161 Video Services
4162 Mission l%s for Cont
4172 Distributions Received
4175 Contributions
4190 Bounced Checks Collected
4195 Prior Year Income
4200 credit Collected
4430 Legal Costs Awarded
4440 Royalty Income
4441 Licensing Fee Income
4442 Distribution fees
5010 Purchases for Resale
5011 Bulk Uniform Purchases
5012 Canteen Purchases
5020 Compensation of Officers
5021 Compensation of Dirs a Trustees
5030 Salaries & Allowances
5032 Parsonage Allowance
5033 Prior Year Salary
5034 Payroll reimbursement
5040 FSM Commissions
5041 Broker Commission
5042 FOLO FSC Exps Sums
5043 Commissions and Awards
5050 Postage & Carriage
5060 Rent
5061 Permits & Licenses
5070 Occupancy

-4-

CSIr Prod 11-4-93 154043

5080 Utilities
5100 Insurance
5110 Telephone
5120 Office 6 Admin
5122 Production Supplies
5130 Hire of Equipment
5140 Rental and Maintenance
5150 Cleaning a Laundry
5160 Rapaira t Maintananca
5161 Rant, Ratas t Insurance
5170 Dissemination
5190 Printing 6 Stationary
5200 Staff Welfare
5201 Public Food
5202 Rastaurant Hotal
5203 Public walfara
5210 Church Walfara
5215 Sarvica Completion Awards
5220 Donations
5230 cash Float
5240 Traval t Transport
5241 Expense Allowance
5242 Food
5245 VISA account
5249 Tours Expenses
5250 Mission Expenses
5259 Research Mission
5260 Legal a Professional
5265 Legal Settlements
5270 Audit & Accountancy
5280 Course Materials
5284 Film Licensing Fees
5286 Licenses, Fees and Dues
5287 RTC Adv Tech Lie Fees
5290 Bank Charges
5300 Staff Training
5301 Scholarships
5310 Contrib to other Orgs
5315 Grants-Social Betterment Groups
5320 Estates
5331 Distribution fees
5335 Consultancy
5340 Interest
5345 Ecclesiastical Guidance CSI
5361 Distributions
5380 Memberships
5390 Miscellaneous
5400 Ecclesiastical Tech Serv RTC
5401 Film Royalties

-5-

CSV Prod 11 4 93 154044

 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

-6-

154045
 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

4-28
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

4-29
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.

4-30