irs question 4 a-f

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QUESTION 4-aa. Please provide all directives (iacludiag HCO PolicyLetters, Executive Directives and similar items) that set forth theamount and method by which the following entities* income isallocated to expenses (i.e. retained for its own uses) or ispaid/contributed to CSX or other Scientology-related organisation:(i) CSPSSO; (ii) CSF80; (iii) CSWTJ8; (iv) CSREC; (v) all celebritycenters not included in (i) - (iv) above; (vi) IPT; (vii) NBP;(viii) BPI; and (ix) any Advanced or Saint Hill organisation notalready included in a category described above. Please include allecclesiastical organisations within the above entities. Where youhave provided a directive in response to another question acitation thereto is sufficient response.

* * * *

Attached are copies of the directives that give the amount andmethod by which income is allocated to expenses for each of thelisted corporate entities. (Exhibit III-4-A).The directive in each case is an International FinanceExecutive Directive entitled "FBO ALLOCATION FORM - _ _ _ ^ [orgname]". Each directive applies to a particular ecclesiasticalorganization. Since higher level church corporations often housetwo or more ecclesiastical organizations, two or more directivesmay apply to a particular church corporation.For your information, attached to each directive is a model ofthe actual form that is completed by the ecclesiastical

organization's Flag Banking Officer each week.The ecclesiastical organizations within each of the aboveentities and the directive that is applicable to each, are asfollows:( i) c s r s s o ;Int Finance ED 384FBO ALLOCATION FORM - FLAG SHIP SERVICE ORG( i i) c s r S Q ;a. Int Finance ED 381RFBO ALLOCATION FORM - FLAG SERVICE ORGb . Int Finance ED 382FBO ALLOCATION FORM - FLAG CREW ORG

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liii) cswus;a. Int Fina nce ED 378 FBO ALLOC ATION FORM - AOLA(for Advanced Organization Los Angeles)b. Int Finance ED 379FBO ALLOCATION FORM - ASHOs(for American Saint Hill Organization Day andFoundation orgs)c. Int Finance ED 383FBO 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 386FBO ALLOCATION FORM - NON-US SEA ORG ORGS(for Advanced Organization Saint Hill UK)b. Int Finance ED 380FBO 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 INTb. For other Celebrity Centre orgs - see Int Finance ED383, FBO ALLOCATION FORM - CLASS V ORGS, above.fvi) IPT;IPT's only source of income is advances from ScientologyInternational Religious Trust to cover its de minimis annualexpenses. It does not allocate or otherwise pay funds to CSIor any Scientology-related entity, and there is no directivepertaining to any such allocation or payment.

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( v i i ) N E P ;a. Int Finance E D 389

N E W ERA PUBLICATIONS - FBO ALLOCATION FORM( v i i i ) B P I:a. Int Fi nance E D 388

BRIDGE P UBLICATIONS - FBO ALLOCATION FORM(ix) any Advanced or Saint Hill organi zation not alreadyincluded in a category described abov e.See Int Finance E D 386, FBO ALLOCATION FORM - NON -US SEA ORGORGS, abov e. The saae form applies to both Advanced OrganizationSaint Hill E urope & Africa (AOSH E U ) , and to Advanced Organization

Saint Hi ll Australi a, N ew Zealand & Oceania (AOSH ANZO), which arethe only two other AOSHs not i ncluded abov e.

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QUESTION 4-C4o. Please provide a list and explanation of the income andexpense categories, as vail as balance sheet accounts.

* * * *Attached as Exhibit III-4-B are the lists and explanations ofthe income categories and the expense categories. These income anddisbursement categories are in general use throughout Scientology.These categories cover the most common sources of income and mostcommon types of disbursements found in most Scientology churchesministering religious services. Additional categories aregenerally created locally as needed for other types of activitiesfound within different types of Scientology organizations, such asManagement 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 theirbalance sheets. However, there are standard balance sheetgroupings of assets and liabilities. In church organizations thatprepare their balance sheets using a local computer program, localcharts are developed tailor-made to their needs assigning specificnumbers to the general and specific asset and liability accounts.Attached as Exhibit III-4-C is a chart of the different balancesheet accounts used by many United States Scientology churches.Not every individual organization necessarily will use all or evenmost of the listed accounts; the chart also does not list balancesheet accounts that are unique to individual church organizations.

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SCXEHTOLOGY ACCOUNTS AUDITSI>CCKE AUDIT CATEGORIES

TRAINING AND PROCESSINGThis income category account* for receipta associated with theministry of raligious sarvicas to parishionara. Within thiscategory ara savan subcategories:1A NOTS, SOLO NOTS AND LEVELS ABOVE OT VIIIB ADVANCED COURSES1C TRAININGID PROCESSINGIE QUALIF BASIC COURSES1G FREELOADERS BILLINGS: Staff members who enter into astaff contract are entitled to participate inreligious aervices at their employing church withoutmaking any donation. If a contracted staff memberleaves the church's employ before completing his orher contracted term of aervice, he or ahe will bebilled for some or all of the requested donations forthe religious services he or she received while onstaff. Although legally enforceable, such debts araenforced only through ecclesiastical means: a former

staff member generally will not be permitted toparticipate in additional religious services until thedebt is satisfied. (Debit/Credit Breakdown only).Collections on Freeloader Billings are accounted forunder Income Category Code 6B.This category does not include prepayments received orcredit collections, which are accounted for under IncomeCategory Code Number 6.

BOOKSTORE SALES2A BOOKSALES: This income category accounts for all salaa ofbooks, tapes, packs, insignia, bulletins, worksheets and

any other tangible items other than meters and acceasories.2B METER SALES: This income category accounts for all aalaaof E-meters and accessories.3 MEMBERSHIPS: This income category accounts for payment*for HI Want to Go Clear Club" or the "OT Club" memberships.4 FSM COMMISSIONS RECEIVED: This income category accountsfor fundraiaing (FSM) commissions received from other orgs,e.g., from Flag or an Advanced Org

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5 DONATIONS: This income category accounts for contributionsfor any purpose not associated with ministry of religiousservices or purchase of religious materials.MEMBERS ACCOUNTS6A ADVANCED PAYMENTS (APs)/PREPAYMENTS RECEIVED (PPR): Thisincome category accounts for donations received in advancsof participation in religious services by the contributingparishioner.6B CREDIT COLLECTIONS: This income category accounts forpayments received on crsdit and collsctions from formerstaff.6C DEBITS/CREDITS: The total of the Debit/Credit Breakdowngoas in this category.D I S B U R S E M E N T CREDITS: This income category accounts for allmonay racaivad which offsats or reimburses a disbursement e.g.,phone money, photocopies paid for, returned mission and travelexpenses, etc. The relevant disbursement code is added, forexample, a return of phone money advanced would be 7/07. Othersubcategories are:

7/03A FSM AWARDS: Awards credited directly to FSMs'Accounts. (Debit/Credit Breakdown only).7/22 BANK CHARGES: Bank charges deducted fromdeposits on credit side of bank statement7/22A BANK INTEREST RECEIVED7/23R EXCHANGE DIFFERENCES AND REALIZED GAINS ONCURRENCY CONVERSIONS7/2IP EXCHANGE DIFFERENCES (UNREALIZED)7/24 BOUNCED CHECKS NO DEBIT/CREDIT7/24A COLLECTIONS OUT (MINUS FIGURE): Cheeks, foreign

currency bank drafts, or Letters of Transferwhich have to be sent out for collection beforethey can be credited by the bank on the bankstatement. These amounts sometimes are notdeposited immediately, or, if not deposited, arenot immediately creditable to the church*saccount. Because the invoiced amounts have beencounted as income, amounts must be subtractedusing this category (Collections Out) so that thebankings (deposits) reconcile with the income-2-

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amount on the audit. rNota; when the money iscollected, it is accounted for under IncomeCatsgory 11B as a Collection In.)

7/27A RETURNED DISBURSEMENTS - LAND 6 BUILDINGS7/27AS SALES ON LAND k BUILDINGS7/27B RETURNED DISBURSEMENTS - PLANT & TECHNICAL7/27BS SALES OF PLANT & TECHNICAL7/27C RETURNED DISBURSEMENTS - FURNITURE 6 EQUIPMENT7/27CS SALES OF FURNITURE 6 EQUIPMENT7/27D RETURNED DISBURSEMENTS - OFFICE EQUIPMENT7/27DS SALES OF OFFICE EQUIPMENT7/27E RETURNED DISBURSEMENTS - AUTOMOBILES7/27ES 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: 9ABANK meaning a loan received from the bank; 9A CSRT means aloan received from CSRT (Church of Scientology ReligiousTrust).9B LOAN REPAYMENTS RECEIVED: A suffix code is used toindicate the person or org repaying a loan.10 CONTRAS: This income category accounts for all incomeitems which have an offsetting disbursement.10A CONTRAS - OVERLAP PRIOR: Contra which matches adisbursement (contra) from a prior period.10B CONTRAS - OVERLAP FORWARD: Contra which matches an amountto be disbursed in a future period.B o u n c e d c h e c k s c o l l e c t e d / C o l l e c t i o n s I n11 BOUNCED CHECKS COLLECTED11A BOUNCED CHECKS/BOUNCED CHECKS COLLECTED: Debits to

parishioner accounts for checks returned for insufficient-3-

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funds, and credits to parishioner accounts for such checkslatsr collsctsd. (Debit/Credit Brsakdown only.)11B COLLECTIONS IN: Credits for moniss collsctsd from chsclcs,bank drafts and lsttsrs of transfsr prsviously ssnt out forcollection (sss category 7/24A).12 REPAYMENTS DEBITS: Debits to parishioner accounts forrepayments made. (Debit/Credit Breakdown only.13 INTER-ACCOUNT TRANSFERS: This income category accounts fortransfers of funds to one org bank account from anotherbank account within the same org.13A INTER-ACCOUNT TRANSFERS FROM OVERSEAS OR RESERVE ACCOUNTS13B INTER-ACCOUNT TRANSFERS - OVERLAP PRIOR: This incomecategory accounts for any inter-account transfer whichmatches a disbursement from a prior period.13C INTER-ACCOUNT TRANSFERS - OVERLAP FORWARD: This incomecategory accounts for any inter-account transfer whichmatches a disbursement from a later period.14 INTER-ORG TRANSFERS: This income category accounts forpayments from other church organizations that are part ofthe same corporation. This category does not include any

payments which come from outside the corporation; those goin category 15. A suffix code is used to indicate the orgor unit within the corporation from which the payment hasbeen received. Example: 14-AOLA would signify an Inter-orgtransfer from AOLA to another org within CSWUS. Inter-orgtransfers are separately categorized for each separatechurch org within the corporation.15 CONTRIBUTION FROM OTHER ORGS: This income categoryaccounts for all contributions from orgs that are not inthe same corporation as the recipient org and which are notcovered 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; eachsuch item is separately scheduled. This category also isused temporarily for unidentified items while the missingdata is being obtained.30 RENTAL INCOME31 CANTEEN RECEIPTS: This income category accounts forreceipts from the canteen, vending machines, laundromat andpay phone commissions.

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3 2 ROOM AND BOARD: This income category accounts for cashreceipts for room and food, whether room by itself and foodby itself, sale of meal tickets, restaurant receipts, etc.3 3 INSURANCE CLAIMS34 LEGAL COSTS AWARDED

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Scientology ACCOUNTS AUDITSDISBURSEMENT AUDIT CATEGORIES

1 PURCHASES FOR RESALE: This disbursement category accountsfor books, tapes, E-Meters and accessories purchased forresale in church bookstores.2 SALARIES: This disbursement category accounts forsalaries, commissions and bonuses paid to staff, includingany federal and/or state withholding taxes withheld fromcompensation.3 FSM COMMISSIONS3A COMMISSIONS AND AWARDS: This disbursement categoryaccounts for commissions other than FSM commissions and anynon-monetary awards.4 POSTAGE AND CARRIAGE/FREIGHT CHARGES: This disbursementcategory accounts for postage and carriage incurred in theministry of religious services and dissemination of theScientology faith. Shipping on books and meters purchasedfor resale are accounted for under Disbursement Category 1.5 RENT: This disbursement category accounts for amounts paidfor use of real property. Rent for cars, machines orequipment are accounted for under separate categories,.Security deposits are accounted for under DisbursementCategory 29 and do not become a rent expense unless theyare actually used to pay rent. Rent for outside staffberthing facilities is accounted for under DisbursementCategory 14.5A INSURANCE: Examples: fire, general liability, workerscompensation, disability, etc. This category does notinclude auto insurance which is accounted for underDisbursement Category 16.5B PROPERTY TAX, RATES, ETC.: This disbursement categoryaccounts 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 addedtax or payroll taxes withheld are accounted for underDisbursement Categories 35 and 2, respectively.6 UTILITIES (LIGHTING, HEATING 6 WATER): This disbursementcategory accounts for deposits of less $100.00. Depositsin excess of $100 are accounted for under DisbursementCategory 29.

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7 TELEPHONE, TELEX, FAX & PAGERS8 REPAIRS AND MAINTENANCE: This disbursement categoryaccounts for general upkeep of premises and equipment,including supplies like paint, nails, too ls. Auto rapairsare accountad for undar Disbursement Category 16. Capitalexpenditures to increase the value of premises or equipmentara accountad for undar Disburseaent Category 27a.9 CLEANING AND LAUNDRY10 OFFICE AND ADMINISTRATIVE EXPENSES: This disbursaaantcategory accounts for office supplies, graph paper, officemachine supplies, office reference books, vending aachine

expenses, and similar recurring expanses that do not fitundar any othar category.11 HIRE (LEASE) OF EQUIPMENT: This disbursaaant categoryaccounts for hiring or laasing charges on equipmentsuch as offica equipment, whare ownership remains withtha lessor. Installment purchases ara accountad forseparately undar Disbursaaant Category 41.12 DISSEMINATION EXPENSES: This disbursaaant categoryaccounts for axpenses incurrad to proselytize Scientology,including public events.13 PRINTING AND STATIONERY: An acquisition of new printingequipment would ba accounted for undar DisbursaaantCategory 27B.14 STAFF WELFARE (SEA ORG ORGS only): This disbursaaantcategory accounts for staff food, uniforms, berthing,medical/dantal costs, child cars, and similar banafitsaccordad aaabars of tha Saa Org.15 SERVICE COMPLETION AWARDS: This disbursaaant categoryaccounts for saall awards to parishionars upon coaplationof particular raligious services.16 TRAVEL AND TRANSPORTATION EXPENSES: This disbursaaant

category accounts for all transportation and lodgingaxpansas for staff aaabars travailing on org business,whathar locally or out of town. This disbursaaant categoryalso includas costs associated with operation of vehiclesowned by tha org (vehicle ragistration and insurance,rapairs, etc.) Travel costs for staff to participate inraligious services at othar orgs ara accountad for underthis catagory-, but thair living axpansas while attandingcoursas out-of-town ara accountad for undar DisbursaaantCategory 38 (Staff Training Expenses). Purchase of-2-

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automobiles is accounted for under Disbursement Category27E. Transportation costs directly connected with publicevents (for example, airfares for speakers; local transportfor attending parishioners and guests) are disseminationexpenses accounted for under Disbursement Category 12.17 SCHOLARSHIPS: This disbursement category accounts forstipends or study allowances awarded to parishioners.18 LEGAL AND PROFESSIONAL: Professional fees paid inconnection with the purchase of real property are accountedfor under Disbursement Category 27A.19 AUDIT AND ACCOUNTANCY20 COURSE MATERIALS: This disbursement category accounts formaterials purchased for use in connection with religiousservices rather than for resale.21 INTEREST PAID: This disbursement category accounts formortgage interest, late payment charges on mortgages, andinterest on late tax payments. The principal portion ofmortgage payments is accounted for under DisbursementCategory 30.22 BANK CHARGES AND INTEREST23R EXCHANGE DIFFERENCES 6 REALIZED LOSSES ON CURRENCY

CONVERSION24 BOUNCED CHECKS: This disbursement category accounts fordebits for checks returned for insufficient funds.25 REPAYMENTS (OF ADVANCED PAYMENTS): This disbursementcategory accounts for return of all or part of an advancedpayment to aparishioner or the transfer of his o r heradvance payment to another org, where the parishioner didnot participate in the religious services with respect towhich the advance payment was made.26 REFUNDS: This disbursement category accounts for donationsreturned to a parishioner who has participated in the

religious services with respect to which the donation wasmade.FIXED ASSETS:

This disbursement category includes various sub-categoriesfor items of lasting value which have a life of more than oneyear. This category does not include items of personal property-3-

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purchased for lass than $100.00 irrespective of their ussfullives. This category also includes sales tax and shipping costsinvolved in the purchase of the specified assets.27A PURCHASE OF LAND AND BUILDINGS (REAL ESTATE OR PROPERTY):This disbursement category accounts for the originalpurchase cost of land and buildings and associatedprofessional fees. Inventory, furniture and/or equipmentwithin purchased real property are accounted for underDisbursement Categories 27 B-D) .27A1 LAND AND BUILDING IMPROVEMENTS: This disbursement categoryaccounts for improvements to existing real property and allcosts of self-constructed buildings.27B PLANT AND TECHNICAL EQUIPMENT: This disbursement categoryaccounts for boilers, central heating, sprinkler systems,electrical wiring and installations, water and sewer lines,plumbing fixtures, printing equipment, computers, taperecorders, film projectors, address equipment, agriculturalequipment, catering equipment, and similar property.27C FURNITURE, FIXTURES AND FITTINGS: This disbursementcategory accounts for desks, chairs, tables, carpets,curtains, beds, bathroom fittings, picture frames andphotographs/paintings, busts, light fixtures and anythingfitted to or on walls, floors and ceilings.27D OFFICE EQUIPMENT27E MOTOR VEHICLESLOANS,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 underDisbursement Category 30.29 DEPOSITS OR SECURITY30 MORTGAGE LOAN REPAYMENTS: Mortgage loan interest isaccounted for under Disbursement Category 21.31 CONTRAS: This disbursement category accounts for bankdebit errors o r corrections, relays of monies received for(or on behalf of) another organization which are now beingdisbursed to the proper recipient, and any payment whichoffsets a contra income item received. (Note The Contraamount on the Income and Disbursements Summaries must agreeexactly, after taking into account any outstanding contraitems, prior or forward.)

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3 2 INTERNAL TRANSFERS (INTER-ACCOUNT TRANSFERS): Thisdisbursement category accounts for money transferred fromone account to another. The major portion of entries inthis category will be the weekly allocation from the orgsFinance Office Number 1 account to the various operatingaccounts.33 TRANSFERS TO DEFENSE OR OVERSEAS ACCOUNTS34 SUSPENSE: This disbursement category is used temporarilyfor items as yet unidentified.35 SALES (VALUE ADDED) TAX PAYMENTS: Sales tax paid onpurchases remain part of the disbursement for the item.36 PAYMENTS TO FLAG: This disbursement category accounts forall payments to Reserves; each separate payee is shownseparately.37 FLAG EXTERNAL EXPENSES PAYMENTS: This disbursementcategory accounts for all payments made by an org inconnection with an on-site assistance from a superiorecclesiastical org. Payments are made against anauthorized Flag External Purchase Order.38 STAFF TRAINING: This disbursement category accounts forpayments to other orgs for training of staff, including

room and board and/or subsistence allowances.39 INTER-ORG TRANSFERS: This disbursement category accountsfor payments to other church organizations that arepart of the same corporation. This category does notinclude any payments to any org outside the corporation; thosego in category 40 . A suffix is used to indicate the org orunit within the corporation to which the payment has beenmade. Example: 39-AOLA would signify an Inter-org transferto AOLA by another org within CSWUS. Inter-org transfersare separately categorized for each separate church orgwithin the corporation. (This is the disbursementcounterpart to Income Category 14 ) .40 CONTRIBUTIONS TO OTHER ORGS: This disbursement categoryaccounts for transfers to other orgs/units that are notpart of the same corporation as the paying org and which donot fall under any other disbursement category.41 HIRE PURCHASE (OR INSTALLMENT CONTRACT) PAYMENTS: Paymentsmade for equipment purchases made on time payment basis.

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42- Film lease payme nts: this disbuirsment category accountsfor paymen ts made to pay for usage of othre scientologyfilms43 - Tech licencing fees: this disbursment category accountsfor any contractual paymen ts for usage of technicalmaterials (e.g. advance technology licence fees)

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QUESTION 4-crepresentative chart ACCOUNTs for balance sheetsACCOUNT NUMBER ACCOUNT NAME

1009 Cash Non Interest Bearing Accou nts1010 cash1011 Cash-in-Transit1012 Cash Float1015 Pracious Matal s1020 SORMS1030 Inventory1040 Cartificata of Dapo sit1041 Lattar of Cradit1042 Traasury Bonds1045 Prapaid Fadaral Tax - Backup Withholding1050 Stock1051 Bonds1052 Lagal Sacurity Bond1053 Prapaid Bond Intarast1055 Daposits on Fixad Assats1056 Daposits on Hatar Mold1065 Building1069 Accum Daprac-Building s1070 Land1072 Land Improvement s1073 Accum Deprec-Land Improvamants1074 Land Improvamants in Progr ess1075 Constructi on in Progre ss1076 Asse ts not Placed in Service1078 Building Improvemen ts1079 Accum Depr-Building Improvements1080 Leasehold Improvements1090 Accu m Depr-Leasahold Impr1100 Computer t other 5 yr Equip1105 Accum Depr-5 Yr Equipment1110 Fura/Equip 7 Yr (5 Yr Pre-87)1117 Trademark Cost s1120 Accum Oepr-Furn & Equip1125 Other Fixed Asset s1130 Accum Depr-Other Fixed Asse ts1138 Films1139 Accum Amor t - Films1140 Other Assets1150 Motor Vehicles1160 Accum Depr-Vehicles1162 Heavy Equip t Buses (5 Yr)1164 Accum Depr-Heavy Equip 6 Buses1-170 Software Develo pment1171 Trademark Costs

Ex. III-4-C

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1172 Trademark Coata-Non-Amort1173 Softwara not placad in Sarvica1174 Softwara Purchaaad1175 Accum Amort-Softwara Oaval1176 Accum Amort-TM Coata1177 Accum Dapr-Purchaaad Softwara1178 Accum Amort - Othar Aaaata1180 Loan Racaivabla1183 Contra Racaivabla1185 Aceounta Racaivabla1189 Loan Rac - Mortgagaa1190 Loan Rac - Staff1191 Raaarva for Bad Dabta1192 Diacount On Mortgaga Notaa1193 Accumulatad Mortgaga Intaraat1319 Notaa Racaivabla1320 Dapoaita1321 Salaa Tax Dapoait1322 Rantal Dapoaita from Rantara1327 Eacrow Dapoait1330 Prapaid Expanaaa1331 Prapaid Taxaa1332 Prapaid Licanaing Faaa1333 Royalty Advancaa1334 Prapaid Mgmt Faaa to CSI1335 Organizational Costa1336 Accum Amortization - Org Coata1367 Capital Invatmt in Subaidiariaa1410 Righta1411 Accum Amort - Righta1412 Dafarrad Intaraat1413 Unraalizad Exch Loaa (Gain)1420 Dafarrad Intaraat1952 Lagal Bond2010 Inatallmant Cont Payabla.2020 Computar Liability2030 Loan Payabla2031 Rantal Dapoaita2040 Bonda Payabla2048 Salaa Tax Payabla2050 Notaa Payabla2053 Sattlamant Payabla2055 Dapoaita Payabla2057 Salary Payabla2058 Salaa Tax Payabla2059 Payroll Taxaa Payabla2060 Aceounta Payabla2065 Dafarrad Racaipta2066 Contraeta Payabla2067 Cuatomar Dapoaita

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2069 Installment Sal*2070 Leases Payabla2071 Royaltiaa Payabla2072 Licanaing Faas Payabla2075 Mortgagaa Payabla2080 Contra Owing2081 Intar-Account Owing2100 Loan Payabla2125 Accdunts Payabla2189 Accruad Intaraat Payabla2200 Dafarrad Rights Income2240 Program Commitmants3000 (Surplus)oaficit3005 Adjustmants to Equity3010 Paid-in Capital3020 Prior Yaar Film Capital Adj4020 Raaalabla Itams4021 Uniform Salas4022 Incoma Cantaan 6 Bookstore4023 Bookstore sales4024 Meters and Accessories4025 Meter Repairs4027 Subscription Income4028 Projector Repairs4030 Members Accounts4031 Members Accounts - Accommodations4035 Memberships4040 FSM Commissions4050 Donations4060 Interest4061 Mortgage/Loan Interest4065 Dividends4066 Capital Gains4067 Rights Income4068 Bad Debt Income4069 Insurance Claim Proceeds4070 Investment Income4080 Cash Over/Under4085 Suspense4090 OT Club Income4100 Dissem Products4101 Advertising Income4102 Starter Packages4103 Mailing List Income4104 Consulting Income4105 Issue Authority Service4107 Room and Board4110 Miac. Income4113 Canteen Commissions

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4114 Canteen Income4115 Freeloader Collections4117 Rental Income4118 Telephone Commission*4119 Laundry Machine Income4120 Computer Services4121 Computer Software Sales4122 Accommodations4123 Vending Commissions4124 Conventions4127 Room, Board and Childcare4128 Staff Movies Income4129 Computer Hardware Sales4130 Training & Processing4135 Advanced Tech Licensing Fees4140 Management Payments4141 Tithes4150 Marketing Products4155 Video Production Reimbursement4156 Event Production Reimbursement4160 Film Sales/Licensing Fees4161 Video Services4162 Mission l%s for Cont4172 Distributions Received4175 Contributions4190 Bounced Checks Collected4195 Prior Year Income4200 credit Collected4430 Legal Costs Awarded4440 Royalty Income4441 Licensing Fee Income4442 Distribution fees5010 Purchases for Resale5011 Bulk Uniform Purchases5012 Canteen Purchases5020 Compensation of Officers5021 Compensation of Dirs a Trustees5030 Salaries & Allowances5032 Parsonage Allowance5033 Prior Year Salary5034 Payroll reimbursement5040 FSM Commissions5041 Broker Commission5042 FOLO FSC Exps Sums5043 Commissions and Awards5050 Postage & Carriage5060 Rent5061 Permits & Licenses5070 Occupancy

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5080 Utilities5100 Insurance5110 Telephone5120 Office 6 Admin5122 Production Supplies5130 Hire of Equipment5140 Rental and Maintenance5150 Cleaning a Laundry5160 Rapaira t Maintananca5161 Rant, Ratas t Insurance5170 Dissemination5190 Printing 6 Stationary5200 Staff Welfare5201 Public Food5202 Rastaurant Hotal5203 Public walfara5210 Church Walfara5215 Sarvica Completion Awards5220 Donations5230 cash Float5240 Traval t Transport5241 Expense Allowance5242 Food5245 VISA account5249 Tours Expenses5250 Mission Expenses5259 Research Mission5260 Legal a Professional5265 Legal Settlements5270 Audit & Accountancy5280 Course Materials5284 Film Licensing Fees5286 Licenses, Fees and Dues5287 RTC Adv Tech Lie Fees5290 Bank Charges5300 Staff Training5301 Scholarships5310 Contrib to other Orgs5315 Grants-Social Betterment Groups5320 Estates5331 Distribution fees5335 Consultancy5340 Interest5345 Ecclesiastical Guidance CSI5361 Distributions5380 Memberships5390 Miscellaneous5400 Ecclesiastical Tech Serv RTC5401 Film Royalties

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5402 Royalties5403 Licensing Fees5410 Exchange Diffsrsncss5415 Thaft Loss5417 Bad Oabt Expanse5420 Salas Tax5430 Bounced Checks5435 Collection Items In/Out5440 Repayments5445 Refunds5450 Depreciation Expense5451 Depreciation - Prior Year Adj5452 Section 179 Expense5455 Amort Expense - Software Devel5456 Amort Expense - TM Costs5457 Amort Expense - Rights5458 Film Amortization5459 Prior Year Payroll Taxes5460 Taxes5461 Fed Corp Tax5462 State Corp Tax5463 Amortization5470 Penalties5472 Travel 6 Entertainment5475 Donations5480 Contras5490 Inter Account Transfers5500 Inter Org Transfers5519 Theft Loss5520 Gain/Loss on Sale/Disposal5522 Gain/Loss on Sale Land/Bldgs5525 Realized Gain/Loss on Invstmts5526 Paper Gain/Loss on Investments5527 Gain/Loss on Mortgage loans5528 Prior Year Sales Tax Paid5529 Prior Year Payroll Taxes5530 Partnership Loss5580 Film Production Expenses5581 Video Non-Resale Prod Exps5582 Film & Equipment Unit Expenses5583 Audio Visual Unit Expenses5584 Transfer to Film Capitalization5585 Transfer to Inventory Capitalization5750 Research t Development

The 6000's, 7000's, 8000s and 9000's are generally usedfor the various inter-org transfers amongst ecclesiasticalorganizations within one corporation, so that they can be easilytraced and reconciled for elimination on consolidation. t

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Questions 4(e) and 4(f)

Please describe whether, and, if so, the extent to which, payments for services rendered at Church of Scientology FlagService Org, Inc. (hereinafter "CSFSO") and Church of ScientologyFlag Ship service Organization (hereinafter "CSFSSO") vera and arenot 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 payingsuch amounts? Please describe in detail the treatment of such funds(i.e. the path of such payments) as of December 31, 1986 as well asany changesin such treatment to the date of this letar. Pleasedescribe in detail the mechanism by which payments by United Statesresidents and funds for services performed in the United States byany other Scientology-related organizations in calendar year 1989were deposited in overseas accounts (e.g., describe the physicaltransfer 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 bysubstituting the term "donations and/or contributions" for the word"payments" or "funds". Is the answer different? If so, pleaseexplain.

Questions 4(e) and 4(f) are being answered together becausethe manner in which Churches of Scientology handle receipts offunds does not differ based on whether the payments are consideredas 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 foreigncurrencies have bank accounts in the U.S. and in other countries inorder to facilitate receipt and clearing of payments. Throughexperience, they have found that overseas banks are able to clearforeign currency payments much faster than U.S. banks, offerforeign currency bank accounts that are not available in the U.S.,provide better currency conversion rates into U.S. dollars than doU.S. banks, and impose lower service charges.

Church of Scientology Flag Service Organization

Church of Scientology Flag Service Organization ("CSFSO"), isan international religious retreat located in Clearwater, Florida.It is the largest single Church of Scientology in the world andoffers Scientology religious

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services from the lowest levels to more advanced levels. CSFSOattracts parishioners from all over the world and receivesdonations for religious services in many different currencies. Itsprocedures for deposit of its receipts, discussed below, have beenin force since before 1986 and remain unchanged today.

CSFSO ordinarily does not deposit foreign-denominated funds inthe U.S. for transfer abroad. Rather, CSFSO deposits foreigncurrency checks or receives bankwires in foreign currenciesdirectly into its overseas bank accounts. CSFSO physically sendsthe foreign-denominated instruments at least weekly by commoncarrier (DHL, Federal Express, etc.) to its various overseas banksfor deposit into CSFSO's accounts. These procedures apply whetherthe foreign checks are received from the parishioner while he orshe is at CSFSO in Florida, or whether he or she is remitting apayment directly to CSFSO abroad.

Checks in U.S. dollars drawn on foreign banks similarly aredeposited in CSFSO's U.S. dollar bank account in Luxembourg. Thisis to facilitate check clearance because CSFSO's principal foreignbank in Luxembourg can clear foreign U.S. dollar checks morequickly than U.S. banks. This procedure applies whether thepayment is sent by a parishioner from abroad or paid in person inFlorida.

Check payments abroad from overseas parishioners usually arecollected by Flag Service Consultant ("FSC") Offices in Denmark,France, Switzerland, Germany, UK, Italy, Sweden, Australia, Mexicoand Canada. Local CSFSO accounts are kept in Australia, France,Switzerland, Germany, Mexico and Canada. In general, foreigncurrency checks are sent either by bank wire from local FSCaccounts or by courier pack direct to the Luxembourg bank for

deposit into CSFSO's account, from countries which do not have aCSFSO local account.

Foreign cash received from a parishioner while he is at CSFSOis converted into U.S. dollars and deposited into local accounts inClearwater. Amounts received from parishioners in U.S. currency,of course, are deposited into local U.S. accounts. This moneyremains in the U.S. and is not transferred overseas. Mostparishioners pay by check, and currency, whether U.S. or foreign,is a very small percentage of funds received. Currency, whetherU.S. or foreign, is never sent abroad in a mailpack because of therisk of theft or other loss.

CSFSO is able to accept payment by certain credit cards (Visaand Mastercard). All credit card payments are deposited directlyinto a local U.S. dollar bank account, whether from U.S. or

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non-US parishioners. Credit card proceeds are always in U.Sdollars, never foreign currencies.

CSFSO also has Reserve accounts overseas in Luxembourg. CSFSOperiodically transfers funds from its Finance Office accounts, into

which its foreign checks and bankwires are initially deposited, tothe Reserve accounts; CSFSO sends its Luxembourg bank writteninstructions to make these transfers and receives debit and creditmemos to confirm these interaccount transfers.

On occasion, CSFSO also may transfer by bank wire funds heldin U.S. banks to its Luxembourg Reserve accounts if such fundsexceed local needs. The reasons for such transfer would includethe availability of higher interest rates in Luxembourg and surplusbalances in U.S. bank accounts in excess of FDIC limits. Suchsurpluses in U.S. bank accounts are rare, so there are very fewsuch transfers.

Church of Scientology. Flag Ship Service Organization

The Church of Scientology Flag Ship Service Organization(CSFSSO) was incorporated in Curacao, Netherlands Antilles as anon-profit foundation in April 1988. It commenced activities on 1May 1988, shortly before the maiden voyage of the Freewinds on 6June 1988. Its procedures for handling its receipts, discussedbelow, have applied since its inception and remain unchanged today.

CSFSSO does not have, nor has it ever had, a United Statesbank account. None of its income has ever been banked in the U,S.CSFSSO has never provided any religious goods or services to itsparishioners within the United States; rather, these activities areconducted entirely outside the U.S., from aboard the M.V.

Freewinds.

CSFSSO has local bank accounts in Curacao, NetherlandsAntilles, the home port of the Freewinds. CSFSSO also has U.S.dollar and foreign currency accounts in Luxembourg. CSFSSO acceptspayments and donations via major credit cards (e.g. Visa andMastercard), which are deposited in its local accounts in Curacao.

Parishioners in the U.S. who wish to make donations to CSFSSOfor religious services usually send payment by check or credit carddebit to CSFSSO via the Church of Scientology Freewinds RelayOffice, located in Clearwater, Florida. This is a practicalexpedient because the Freewinds is usually at sea in the Caribbeanand its exact location for mail purposes varies. The Relay Officecollects all mail and other communications destined

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for the Freewinds. Any currency intended for CSFSSO is convertedinto a U.S. dollar draft or money order; cash is never sent abroadin a mailpack because of the risk of theft or other loss. Everyweek, the Relay Office forwards all mail, including checks andcredit 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 byCSFSSO on-board the Freewinds and is deposited into local bankaccounts in Curacao, as noted above.

Church of Scientology International

The Church of Scientology International ("CSI") receivessupport payments from subordinate Churches throughout the world forits ecclesiastical guidance and other international operations asMother Church. CSI also receives contributions from itssubordinate churches towards the cost of broad public disseminationcampaigns, and it collects Film Lease payments per contractualagreements from Churches and, via Scientology Missions

International, from Missions.

Most support payments to CSI from subordinate Churches are inthe form of checks or money orders. However, some U.S. Churchesbankwire their payments to CSI's U.S. account in Los Angeles, whilesome non-U.S. Churches bankwire their support payments direct toCSI's account in Luxembourg.

The Continental Finance offices for Western U.S. (in LosAngeles California), Eastern U.S. (New York), Flag (Clearwater,Florida), Latin America (Mexico), Canada (Toronto), UK (EastGrinstead), Europe (Copenhagen, Denmark), Italy (Milano), AustraliaNew Zealand (Sydney, Australia) assist in the collection of thesepayments from their subordinate Churches. These Churches generallyforward their checks to their respective Continental Finance officefor relay to CSI. These payments almost always are relayed bybankwire.

Non-US Finance offices sometimes send checks from theirsubordinate Churches payable to CSI by courier mailpacks directlyto the Luxembourg bank for deposit into CSI's account. TheContinental Office in Australia, however, collects funds from eachof its subordinate Churches locally and then sends a bankwiredirectly to the CSI Luxembourg account.

Payments other than bankwires and direct deposits to CSI'sLuxembourg accounts are sent to CSI in Los Angeles by mail or

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courier pack or via inter-organizational mailpacks. In general/all foreign currency checks and U.S. dollar checks drawn on foreignbanks are sent by CSI staff via courier pack (DHL or theequivalent) directly to its Luxembourg bank for deposit into CSI'saccount. Before 1990, U.S. dollar checks drawn on domestic banksalso were sent to CSI's Luxembourg account for deposit there.

Since 1990, domestic U.S. dollar checks generally have beendeposited into CSI's account in Los Angeles. CSI does not receivepayments in cash or by credit card.

Primarily for exchange control reasons, CSI has not receivedpayments from Churches in South Africa, Zimbabwe, Israel, Italy,Spain or Portugal, regularly since 1986. Recent changes inexchange control regulations within the European Community,however, mean that periodic payments have resumed or applicationsare in progress from Italy, Spain and Portugal. An application forexchange control approval to remit funds from South Africa wassubmitted 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 atithe to Scientology Missions International ("SMI"). All tithes toSMI in non-US currency bank drafts or U.S. Dollar checks drawn onbanks outside of the United States or Canada have been sent viacourier pack (DHL or the equivalent) to SMI's Luxembourg bank fordeposit. SMI also sends any excess funds held in its localaccounts, or when local accounts exceed FDIC limits, to itsLuxembourg bank by writing a check and including it in the depositsto be couriered to Luxembourg.

Occasionally, SMI's Continental office in Europe will receivea Mission's tithe and send it directly to SMI's Luxembourg accountfor deposit. Some of the European Missions also send theirpayments directly to the SMI Luxembourg account by depositing thefunds directly or sending a wire transfer.

Because of exchange control laws, tithes from South AfricanMissions cannot be sent to SMI. Consequently, an account was setup specifically for SMI in South Africa, to which South AfricanMissions deposit their tithes directly. The local Finance Directorfor the Church of Scientology in South Africa assists SMI inmaintaining this account by sending telex reports to SMI of theamounts received and deposited in this account.

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