Books, Account Debits - Q's for FinallyFree (or anyone)!

fisherman

Patron with Honors
FinallyFree,

I'm hoping you can answer some questions about your post that I copied below. If anyone else can chime in or elaborate on my questions, I'd appreciate that very much.

I'm trying to better understand "staff pay" and "where the monies go" when an "account debit sale" is deducted from "gross income".

1.“FBO” means Flag Banking Officer? Who does an “FBO” work for? In FinallyFree's post, did they work for the “LA Day Org” or someone else?

2.“BSO” means Book Store Officer? I imagine the “BSO” works for “LA Day Org” - Yes?

3.Finally Free wrote, “Why would the FBO product officer the BSO?” – what does this mean? Are you saying that a financial officer was pushing book sales? Something that is “not their hat”?

4.FinallyFree wrote, “the FBO was constantly with the BSO on book sales” ? Why was this a “bizarre scene” ? Doesn't a financial executive need sales data?

5.FinallyFree wrote, “ Shit I have seen DM, WDC’s and Leserve and cronies with my on eyeballs in my org. Cross ordering, being screamed at for not answering a telex or meeting quotas…..” Are you saying that these top execs took an interest in book sales or simply stating that these individuals were a general nuisance?

The infighting over "account debit sales" confuses me. I fully understand how "account debit sales" deducted from gross income, effects staff pay. But this could be solved procedurally. Why the perpetual wrangling?

Is it because prepayments are held by the Org? Do funds leave the "Org" and move "up-lines" when an “account debit sale” is made? That's the only reason I can think of for tussling over these funds.

Any information on how receipts from book sales move “up-lines” -- any information on how book profits are allocated or disbursed (and to who) -- any further information on other "adjustments" that effect staff pay -- would be much appreciated!

fisherman

The "staff pay" thread is here:

http://forum.exscn.net/showthread.php?t=11776&page=5

FinallyFree's Post:

”Cash book sales vs. account debit book sales were a point of high contention at LAD. Whenever GI (Gross Income) was low the ED/CO would check the book sales and ask for the dollar amount that was debited from accounts. One ED and another CO in particular focused in on reducing account debiting for book sales.



Book sales done from debiting from partial or fully paid serviced of any kind was heavily frowned upon. I personally observed the CO accuse the FBO of deliberately attempting to sabotage the org from large debits done off accounts. Debits from service payments. It was a bizarre scene the FBO was constantly with the BSO on book sales. (My memory is foggy on this one. Maybe I didn’t notice the out-point until I now because I am out – but is the FBO senior to the BSO in any way? Why would the FBO product officer the BSO? Carmel – do you know?) Anyways. It was like a witch hunt. WHO is selling books by debiting accounts? WHY aren’t they getting CASH for books??? THEY’RE SUPRESSIVE! It was even subject to an announcement by the CO that staff pay was going to be horrible because of large debits for book sales.



Well then Bridge starting coming into our org…. because someone was suppressing book sales. So then we had Bridge SO members and the FBO in a power struggle with the CO. So then the CO went to management….. Being on staff is hard enough. Try being on staff where any ASHO, AO, Bridge, FOLO, CLO S.O. member could walk right into your org at any time for any reason. Shit I have seen DM, WDC’s and Leserve and cronies with my on eyeballs in my org. Cross ordering, being screamed at for not answering a telex or meeting quotas….. yeah it was all fun and games at LA Day. OH and being subjected to the same S.O. all-hands – because your org sat next to S.O. orgs…. How many times have I said “But I am not S.O.!”……”
 

Dulloldfart

Squirrel Extraordinaire
1. FBO is supposed to be part of the "Finance Network", and not have local seniors. I'm not sure what the current arrangements are.

2. I guess so.

3. The FBO used to have the hat of pushing all the promotional actions of the org, some hundred or so on a checklist (I used to be an FBO). Pushing booksales might be one of them, but individually product officering the BSO is something else and a bypass of org seniors.

4. Not like that. The FBO can get the financial data from the invoices (which he sees daily), and elsewhere. Check with FF, but from your description sounds to me like discussing prospects (public who might pay).

5. Not for me to comment.

Solved procedurally? By whom? Nothing involving income or seniors' stats is easy to solve if it might cut across it.

Prepayments are spent the week they come in. Money is supposedly set aside for bills before the expense is incurred, but rent and electricity doesn't work like that. Every dollar spent on books that is debited from an account is subtracted from that week's cash income. It can really hurt.

Book income supposedly goes into the HCO Book Account and is spend on replenishing book stocks and some is allowed for book promotion. The rules have probably changed since my time but the general idea is that book income is not available for general org expenses as then it would rapidly get gobbled up for that and nothing would be left to replenish the book stocks.

Paul
 

thetanic

Gold Meritorious Patron
1.“FBO” means Flag Banking Officer? Who does an “FBO” work for?

Each org has a finance office with one or more staff, the most senior of which is the FBO. The FBO is responsible for Payments to Flag. The org FBO reports to the cont FBO, not anyone in the org. The network positions (LRH Comm, DSA, etc.) are all like that.

2.“BSO” means Book Store Officer? I imagine the “BSO” works for “LA Day Org” - Yes?

Each org has a bookstore officer. The BSO reports to the department head, who reports to Dissem Sec, HES, ED/CO, respectively. Not to the FBO.

3.Finally Free wrote, “Why would the FBO product officer the BSO?” – what does this mean? Are you saying that a financial officer was pushing book sales? Something that is “not their hat”?

Yes -- but also, book sales never contribute to Payments to Flag. Corrected Gross Income does, and that stat excludes book sales.

4.FinallyFree wrote, “the FBO was constantly with the BSO on book sales” ? Why was this a “bizarre scene” ? Doesn't a financial executive need sales data?

See above. The FBO wasn't doing his or her job but was probably holding D/FBO MORE from above, which is the part of the finance office that oversees book sales and marketing.

The infighting over "account debit sales" confuses me. I fully understand how "account debit sales" deducted from gross income, effects staff pay. But this could be solved procedurally. Why the perpetual wrangling?

The book money was set up the way it was so more $ could go to LRH.

Is it because prepayments are held by the Org? Do funds leave the "Org" and move "up-lines" when an “account debit sale” is made? That's the only reason I can think of for tussling over these funds.

The actual money for prepayments is never held, so if there's an account with $10,000 sitting on it and that money is used for books, then that's $10,000 the org no longer has to operate on or pay staff with.

Any information on how receipts from book sales move “up-lines” -- any information on how book profits are allocated or disbursed (and to who) -- any further information on other "adjustments" that effect staff pay -- would be much appreciated!

Book $ is spent on, essentially:

1. Buying more books.
2. Paying commissions for book sales.
3. Buying promo pieces that promote books and thus sell more books.

Probably some other things I'm forgetting.
 

fisherman

Patron with Honors
Paul and Thetanic,

Thank you! That's very helpful information.

If I'm understanding correctly, book sales seems to operate as a wholly separate enterprise. 10% commission is paid to a Registrar or BSO and then all revenues go "up-lines" to the HCO (Hubbard Communications Office). The FBO at each Org would be responsible for insuring that book sales revenue goes upstream to HCO. Is this a fair summary?

Paul writes that the Org spends (or allocates) prepayments to expenses as soon as they are received. Every dollar a Registrar or BSO converts into booksales is subtracted from those prepayments and may cause a shortfall. In other words, the Org has already spent that dollar and will not be able to meet their obligations. This is reason for the infighting over allocating prepayments to book sales. Is this correct?

Every dollar out of prepayments that a Registrar or BSO converts into book sales is headed "up-lines" to HCO and it's the FBO's job to make sure it gets there. Correct?

Thetanic explains that this system of book sales was originally set up to pay LRH. Now it flows "up-lines" to purchase more books, pay 10% commissions on book sales, and fund further book promotions. Correct?

If that's correct, (other than the 10% commission) are there any other monies taken out of book-sales as those revenues swim upstream to HCO?

Lastly, the profit margin on "in-house" book sales must be enormous. Retail chains work off a 40% markup over the publisher's price. COS publishes and manufactures their own books. COS controls the copyrights and pay no author's royalties. COS pays no tax on book profits.

Given these substantial "built-in" profit advantages, do you have any thoughts on who in COS might be directly enjoying a "slice" of this rather delicious pie? Is their a cadre of executives with the power to tap these funds for personal remuneration?

Thanks again for your help!

fisherman
 

dchoiceisalwaysrs

Gold Meritorious Patron
Books are Ron's personal business run by "church" LOL, staff. Now that ron has gone off to do something else and can't spend the profit from the book sales "somebody else" has to do it for him. Is Miscavage just trying to be LRon?

Just think BUSINESS as established and directed by and for Ron a d whoever takes his place and knows that Ron was a con can get away with more con.

Whether this constitutes enurement depends on the amount of con pulled on the IRS.
 

Dulloldfart

Squirrel Extraordinaire
Paul and Thetanic,

Thank you! That's very helpful information.

If I'm understanding correctly, book sales seems to operate as a wholly separate enterprise. 10% commission is paid to a Registrar or BSO and then all revenues go "up-lines" to the HCO (Hubbard Communications Office). The FBO at each Org would be responsible for insuring that book sales revenue goes upstream to HCO. Is this a fair summary?

Not really. There are several local bank accounts, like the Main Account and the Reserve A/C. One of them is called the HCO Book A/C. It's a local account, not an uplines account.

Paul writes that the Org spends (or allocates) prepayments to expenses as soon as they are received. Every dollar a Registrar or BSO converts into booksales is subtracted from those prepayments and may cause a shortfall. In other words, the Org has already spent that dollar and will not be able to meet their obligations. This is reason for the infighting over allocating prepayments to book sales. Is this correct?

Change the "will not be able" to "may not be able" and it's OK.

Every dollar out of prepayments that a Registrar or BSO converts into book sales is headed "up-lines" to HCO and it's the FBO's job to make sure it gets there. Correct?
The FBO should make sure the money goes where it's meant to. Every penny of the org's GI gets banked by the FBO into the FBO #1 A/C. Every week the FBO transfers money from that A/C to where it's meant to go. One of those cheques at the end of the week is to the org's HCO Book A/C, a local account.
Thetanic explains that this system of book sales was originally set up to pay LRH. Now it flows "up-lines" to purchase more books, pay 10% commissions on book sales, and fund further book promotions. Correct?
No. HCO Book A/C is local. Otherwise OK.

If that's correct, (other than the 10% commission) are there any other monies taken out of book-sales as those revenues swim upstream to HCO?
Dunno currently. There used to be a certain percentage (10% or 20% I think) that was allowed to be spent by the org on magazine costs, on the theory that there were book ads in the mag.

Lastly, the profit margin on "in-house" book sales must be enormous. Retail chains work off a 40% markup over the publisher's price. COS publishes and manufactures their own books. COS controls the copyrights and pay no author's royalties. COS pays no tax on book profits.

Given these substantial "built-in" profit advantages, do you have any thoughts on who in COS might be directly enjoying a "slice" of this rather delicious pie? Is their a cadre of executives with the power to tap these funds for personal remuneration?
The local org buys books from the publications orgs like Bridge, at 50% or 65% bulk discount from the full retail price. There isn't a monolithic "CofS" that buys and sells shit. The public pays cash to the local org. The local org pays cash to the Pubs org. The Pubs Org pays cash to the printer and paper supplier etc., although now they do it in-house these costs must be less. The Pubs Orgs still pay (in cash) author royalties to Hubbard's agent, Author Services Inc. They in turn pass on money to CST to fund the vaults and so forth. These aren't book-keeping entries, but real money moving from place to place.

Paul
 

Been Done Had

Patron with Honors
Fisherman

Kudos for tackling the Byzantine rat's nest of Scientology management.

There's two things to keep in mind.

1. Cash book sales -- Win-win for everyone. Book seller makes their commission. Money goes into HCO book sales account (local org account) Scientologist goes home with their ninth copy of 8-8008.

2. Debit book sales -- A debit sale takes money off the Scientologist's treasury account. This is money they have put on account for services. This could be several thousand dollars. (Or tens of thousands for upper orgs) At a Class V org (LADAY/LAF) these services are often an auditor's training package, IE: All the runway courses -- Student Hat, Pro TRs, Method One, Proffessional Metering, Upper Indoc TRs, eventually your Academy Levels 0-IV.

There is a big discount for plunking down several grand and buying a package, a discount above the usual IAS discount (which is a racket because you can't start course without being in the IAS.)

This money gets deposited into a bank account the week it's regged. By Thursday afternoon, it's been deposited, it now belongs to upper management. It's gone.

The org is still on the hook to deliver these services. This training package on account, which can take a couple years to complete, is now a liability to the church.

So when someone comes along and sells the Scientologist with the 0-IV package a PDC lecture set (it's really expensive) the debit from their account will often break the package. If that package has been on account, say ten years, and their new set of basics takes the balance below the total package price, well they're screwed. They now have to pony up NEW MONEY at CURRENT PRICES if they want to take their courses.

The FBO is like a political officer, their interests is not the org's. They are like upper management from out of town. This FBO in particular may have had orders from CONT/INT level to hack down some of the training packages sitting in LA Org accounts. It's ruthless, but may explain the FBO's behavior. (Also: you can get a unused course package refunded, books are forever.)

As far as the publishing system. Remember, Scientology orgs only sell Bridge products. Bridge is secular, a for profit corporation. They use Sea Org labor. How they launder the labor hours and structure wages I don't know. But considering they have a massive print and CD burning operation, they have a per unit cost much lower than wog publishers.

So they print the books dirt cheap, skip the wholesaler and sell at retail to Sci public. Every possible penny of this retail sale goes to Bridge Publications via the local org's HCO Book Account.

Author Services International takes a royalty from Bridge for permission to publish (I believe ASI is another for profit entity but staffed by SO.) This is how money went to Hubbard personally was through ASI. It acted as his agent.

Note that ASI still collects huge royalties from Bridge. An outfit with very, very low operating costs.

This is how large amounts of money are transferred from the non-profit church side to the for-profit corporate side. One in "for-profit-land," the money can be paid to consultants, attorney's or whomever without the scrutiny a 501C gets. If I were Chairman of the Board, that's how I would pay for my steak dinners and silk shirts; by taking consulting fees out of Bridge and ASI via a management consulting company created for that purpose. COB would be smart enough to not have himself listed as an officer. Someone get the VIIN of his Ducati so we can follow the money trail. :)
 

fisherman

Patron with Honors
Dchoiceisalwayssrs, Paul, and Been Done Had,

Thank you for such careful replies. Please allow me to try and better understand these points. Sorry to be persnickety! :)

1.Local Orgs purchase books at publisher's discount. Cash book sales are deposited into a local HCO “book sales” account and get credited toward the local Org's gross income. Correct?

2.These funds (deposited into a local HCO “book sales” account) are used to pay local Org expenses which includes whatever stipend an individual staff member may receive. Correct?

3.When a Scientologist places money “on account” for local org services those funds get credited toward the local Org's gross income. Correct?

4. These prepayments are used to pay local Org expenses which includes whatever stipend an individual staff member may receive. Correct?

Are these prepayments deposited in a local HCO account that belongs to the local org? Similar to the HCO “book sales” account?

This part has me confused since Been Don Had wrote,

By Thursday afternoon, it's been deposited, it now belongs to upper management. It's gone.

If the prepayments are deposited in a local org's bank account and credited to the local org's gross income, how do these funds disappear?

Now,

Debit Book Sales, When a Scientologist chooses to use funds “on account” at the local org to buy a book – WHO supplies the book?

If the local Org supplies the book, I'd imagine they have to “eat” the cost of the book, which was not part of the original “sale” (which was really a prepayment). The shortfall is the reduction in profit. Is that the problem? Or does the book purchased through a “debit sale” get supplied by Scientology International, through the person who sold it, i.e the BSO? Registrar? Somewhere, I'm missing a link. I can see how a debit book sale would deprive an Org of delivering a higher margin course. But I don't see how a debit book sale would be "re-posted" in the accounting as anything other than an Org sale.

Paul, the “procedural change” I had contemplated is simply: Don't accrue the sale until the course has been delivered. I believe that's standard accounting practice. You post the entry on the balance sheet as an asset along with the corresponding liability, but don't record anything on the income statement.

Thanks again for helping clarify a very complicated subject!

fisherman
 
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dchoiceisalwaysrs

Gold Meritorious Patron
I know it can be tricky and I was never on those lines..just heard discussions about them. Any ED (executive Director) of an org should know.

I think one and two are incorrect. WELL 1 is ok up until the deposit as gross income..it is not it is totally separate??

I think Three and four are correct

Volume three of the green or Org executive course should contain this stuff.

And I do think BEEN DONE HAD is mistaken, I mean how would the org ever pay for any of it's phone bills, rent, supplies and SALARY..
 

Outethicsofficer

Silver Meritorious Patron
Also if books, lectures and meters are sold to someone with money on their service account it reduces the TAP (Total Advanced Payments), money against which there has not yet been any delivery, less potential for a repayment. The longer this money sits there without being delivered against the higher the possibility the person will go off the boil and want it back. Just my opinion.
 

Dulloldfart

Squirrel Extraordinaire
1.Local Orgs purchase books at publisher's discount. Cash book sales are deposited into a local HCO “book sales” account and get credited toward the local Org's gross income. Correct?

All income (books, training and processing, etc.) is collected by the FBO and deposited in the FBO #1 Account. At the end of the week the book income is transferred by cheque from the FBO #1 A/C to the org's HCO Book A/C.
2.These funds (deposited into a local HCO “book sales” account) are used to pay local Org expenses which includes whatever stipend an individual staff member may receive. Correct?

At the end of the week the FBO transfers the "FP (financial planning) allocation" for the week to cover (ho ho) the org's expenses. Staff pay comes out of this. In addition, the org is allowed to spend a certain percentage of the book income for promotion.
3.When a Scientologist places money “on account” for local org services those funds get credited toward the local Org's gross income. Correct?
Joe Public pays cash to the org. This cash is counted as Gross Income. Gross Income is always spendable money, never an accounting entry only. An accounting entry is made showing a credit for that amount to Joe Public's account. Sometimes credits are made to that account that don't involve cash, like "training awards", but such credit can only be redeemed by taking the relevant course, never by "cashing it in" for real money. Credit on account that comes from cash paid is more versatile, and can be returned (if painfully) as cash.

4. These prepayments are used to pay local Org expenses which includes whatever stipend an individual staff member may receive. Correct?
See 1 and 2.
Are these prepayments deposited in a local HCO account that belongs to the local org? Similar to the HCO “book sales” account?
See 1 and 2.

If the prepayments are deposited in a local org's bank account and credited to the local org's gross income, how do these funds disappear?

The org doesn't directly spend the money it makes. It only gets to spend money from its FP allocation, which might be half or a third of the gross income, or even less.

Now, Debit Book Sales, When a Scientologist chooses to use funds “on account” at the local org to buy a book – WHO supplies the book?

If the local Org supplies the book, I'd imagine they have to “eat” the cost of the book, which was not part of the original “sale” (which was really a prepayment). The shortfall is the reduction in profit. Is that the problem? Or does the book purchased through a “debit sale” get supplied by Scientology International, through the person who sold it, i.e the BSO? Registrar? Somewhere, I'm missing a link. I can see how a debit book sale would deprive an Org of delivering a higher margin course. But I don't see how a debit book sale would be "re-posted" in the accounting as anything other than an Org sale.
I think I've already answered that. The org has book stocks, which it paid cash for from the Pubs Org like Bridge. Someone buys a book, it get delivered from the book stocks, whether a cash sale or debit to account. There's no difference.
Paul, the “procedural change” I had contemplated is simply: Don't accrue the sale until the course has been delivered. I believe that's standard accounting practice. You post the entry on the balance sheet as an asset along with the corresponding liability, but don't record anything on the income statement.
No-one locally has a prayer of changing an official procedure beyond which hand to use to wipe their ass.

And they use their hand because there's no money for toilet paper.

Paul
 

MrNobody

Who needs merits?
Thanks Paul. for your informative post. This is an interesting thread, which brings me back to some thoughts I had expressed on another thread here on ESMB re interests.

The price people prepay for books for example - is it a price paid for a product, or is it a "donation" where the "donor" receives a nice present (a book) in return. because he's made a "donation"?

And, if the latter is the case, how many presents (books) are the BIG donors eligible for?

If money on account can be used to pay for a product or service, which would have to be delivered in return, before a debt (gross income) can go over to "products or services delivered and paid for" (gross income - costs = net income).

EDIT
I'm not sure about the "donation" part.
/EDIT

This could be a big can of worms for the cult if they "officially" had to dis-entangle all these money flows and what they were used for. So for people who want their money on account back, the addition of some basic interest rate could be a nice extra for the ones with higher sums on their account. If someone only has a few bucks there, it wouldn't be worth the hassle.

However, my main question: how to separate a "donation" from a "price payed for a delivered service or product"?
 
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Dulloldfart

Squirrel Extraordinaire
However, my main question: how to separate a "donation" from a "price payed for a delivered service or product"?

Everyone in the CofS knows that "donations" for training/auditing and books is a euphemism for "fees" or "prices." At one time, before 1984 approx., that was the only money the CofS took in. I very rarely saw a real donation as FBO. It was awkward, hard to handle, because it was so unusual. About all I recall is someone who had a few pounds left on their account and they didn't want it any more. It was hard to handle accounts-wise. There was always something delivered, either a book (or meter, lectures etc.) or training/auditing.

Then the no-exchange shit started, just taking in "donations" for which there was NO tangible direct exchange. Like IAS statuses, SP building, Ideal Orgs etc.

It's easy to tell the difference from the paperwork. There is always a paper trail, providing the public person kept their receipts. Unless one never spoke to other public, people would carefully keep their receipts because org admin sometimes really sucked, quite apart from the statpush-induced dishonesty.

Paul
 

MrNobody

Who needs merits?
Everyone in the CofS knows that "donations" for training/auditing and books is a euphemism for "fees" or "prices." At one time, before 1984 approx., that was the only money the CofS took in. I very rarely saw a real donation as FBO. It was awkward, hard to handle, because it was so unusual. About all I recall is someone who had a few pounds left on their account and they didn't want it any more. It was hard to handle accounts-wise. There was always something delivered, either a book (or meter, lectures etc.) or training/auditing.

Then the no-exchange shit started, just taking in "donations" for which there was NO tangible direct exchange. Like IAS statuses, SP building, Ideal Orgs etc.

It's easy to tell the difference from the paperwork. There is always a paper trail, providing the public person kept their receipts. Unless one never spoke to other public, people would carefully keep their receipts because org admin sometimes really sucked, quite apart from the statpush-induced dishonesty.

Paul

Sorry, it still isn't clear to me. No matter how the Cof$ (re-)defines the word "donation", it has a definitive meaning outside of their world. So do "prices", "fees" and "prepayment".

As far as prepayments for products/services not-yet-delivered or even not-yet-asked-for go, there shouldn't be any problem to get the money back within a week or so, including an acceptable interest rate, minus an administrative fee of - let's say - $10 or $15 bucks. That's how I think it should work. Does it work that way? If not, why not?

As I've mentioned, I don't know how this might work with donations (in the legal definition of the word in the real world).
 
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fisherman

Patron with Honors
Paul,

I've learned a lot from your explanations and really appreciate the help. It was your comment on the "staff pay" thread that piqued my interest in this. You wrote:

“I did see ridiculous book bonuses being paid out, week after week after week, that did make me sick. Thousands of dollars being paid to reges for getting people to use money they had on account already for training and auditing for "special properties", i.e. fancy leather-bound copies of books selling for thousands of dollars. Just in case anyone doesn't understand this, here it how it works. Book income and tax setasides and so forth are subtracted from the gross income for that week, and the org gets to spend maybe 40-50% of what is left (the "Corrected Gross Income"). This is irrespective of whether the book income is fresh money, or is a debit from account of money paid in years before.

Where you mention that "Book income" is subtracted from the "gross income for that week", I thought you were saying that book sales don't count toward the the local org's "corrected gross income" - EVER.

The topic, though, was "debit book sales" so maybe what I misread, is that you're really saying that "debit book sales" get deducted from the current week's gross income. And since the prepayment was already counted toward gross income (in a prior week). Deducting the "debit book sales" NOW is, effectively, "theft" of income that has long since been booked and spent.

What I still don't understand is how can it be "theft", since the Org really does owe the Scientologist goods or services of equal value. Didn't the Org also record a corresponding liability when it posted the prepayment as income?

You may have explained it already, but I'm still not clear on precisely what monies are causing the "infighting", who they are going to, and who they are being taken away from.

BTW: I have some accounting experience and do follow what you are writing, but a lot of this seems "irregular" :) Your comment on "training awards" was very interesting. It seems "prepayments" are partly serving "promotional" as well as "accounting" purposes. This, obviously, can lead to trouble.

So, again, thank you for a very informative discussion!

fisherman
 

thetanic

Gold Meritorious Patron
Paul,
Where you mention that "Book income" is subtracted from the "gross income for that week", I thought you were saying that book sales don't count toward the the local org's "corrected gross income" - EVER.

The topic, though, was "debit book sales" so maybe what I misread, is that you're really saying that "debit book sales" get deducted from the current week's gross income. And since the prepayment was already counted toward gross income (in a prior week). Deducting the "debit book sales" NOW is, effectively, "theft" of income that has long since been booked and spent.

What I still don't understand is how can it be "theft", since the Org really does owe the Scientologist goods or services of equal value. Didn't the Org also record a corresponding liability when it posted the prepayment as income?

Standard accounting practice would be to not recognize the revenue until it was used (e.g. spent for books or used for service).

Scn does not follow standard revenue recognition which is how it's so easy for them to be out-exchange with the public.

Think about it, if staff didn't get paid until the service was at least started or the books delivered, the focus would immediately shift from regging to delivery.
 

Dulloldfart

Squirrel Extraordinaire
Fisherman, here's an example. The number of transactions isn't real, but the figures are vaguely accurate and the principle is.

W/E 1.1.80
Gross Income:
Joe Public pays $5000 cash for training courses and auditing.
Jane Public pays $2000 cash towards a Mark VII meter, but doesn't have enough money yet for it.
Sue Public pays $1000 for books, which are delivered to her immediately from existing stocks.
--This isn't GI, but this week George Public debits $3500 from his account (prior services income) for a meter.
Total GI for the week: $5000 + $2000 + $1000 = $8000.

Deductions:
10% government tax on the $5000 services income = $500*
Book monies: $2000 + $1000 + $3500 = $6500
Total deductions: $7000

Corrected Gross Income = $8000 minus $7000 = $1000

Deductions:
5% CGI to International Building Fund = $50
5% CGI to local middle management org = $50
Payment to Flag from FBO = $400
Org FP allocation = $500 (note the rent and electricity totals $600 a week).

*There should also be a correction on the tax setasides, since $3500 of services income has been re-purposed to books (no tax) and so too much tax has now been paid, but let's ignore that to make the calculation simpler.
-----

Alternative scenario, if the reges had got new money from George Public instead:

W/E 1.1.80
Gross Income:
Joe Public pays $5000 cash for training courses and auditing.
Jane Public pays $2000 cash towards a Mark VII meter, but doesn't have enough money yet for it.
Sue Public pays $1000 for books, which are delivered to her immediately from existing stocks.
--George Public pays cash $3500 for a meter.
Total GI for the week: $5000 + $2000 + $1000 + $3500 = $11,500.

Deductions:
10% government tax on the $5000 services income = $500*
Book monies: $2000 + $1000 + $3500 = $6500
Total deductions: $7000

Corrected Gross Income = $11,500 minus $7000 = $4500

Deductions:
5% CGI to International Building Fund = $225
5% CGI to local middle management org = $225
Payment to Flag from FBO = $1500
Org FP allocation = $2510.

See the difference?

The payment to Flag is arbitrary. Basically, after the percentages come off, what's left covers the FBO's payment to Flag (the FBO's stat) and the org FP allocation. Increasing one reduces the other. The FBO can't send it all to Flag as he also has to keep the org running. But if he sends nothing to Flag he'll get taken off post. :)

Paul
 
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greebly

Patron with Honors
I like this sort of thread more like this please!
Still digesting it all for my DB.

Btw willhaven720 on wwp was part of this so he could add any recent developments.
 

fisherman

Patron with Honors
Paul,

That was a great example and it helped me a lot. Thank you!

My only question: Where are the "deductions" deposited once they're tallied? Example #1 $8,000 - $7,000 = $1,000 Example #2 $11,500 - $7,000 = $3,500 WHERE does the $7,000 go? Into an account controlled by the FBO? Sent "up-lines" ?

I now have a much better understanding. Here's where I think I slipped up. I kept imagining that the accounting had something to do with financial reality, but I think I was mistaken! I guess ideas like "accrual", "cost of goods sold", and "value added compensation", would be too old fashioned for Scientology? :unsure:

Generally though, I think I've got the picture. You really made it crystal clear!

One last "point of information" -- when you say "sent to flag" - what does "flag" mean? Recently I've seen the term "Flag" used, almost generically, to mean "up-lines" or "having to do with the senior management of Scientology international" Is this correct? Or does "flag" mean something very specific? Previously, I thought "Flag" referred only "Flag Land Base" in Clearwater (or "Flag" base when it was aboard the "Apollo"). Now with "Flag Banking Officers" and "Sent to Flag" I'm not certain what the term refers to. Clarification?

Once again, thank you for taking so much time to answer my questions. I appreciate your patience!

fisherman
 
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Dulloldfart

Squirrel Extraordinaire
One "point of information" -- when you say "sent to flag" - what does "flag" mean? Recently I've seen the term "Flag" used, almost generically, to mean "up-lines" or "having to do with the senior management of Scientology international" Is this correct? Or does "flag" mean something very specific? Previously, I thought "Flag" referred only "Flag Land Base" in Clearwater (or "Flag" base when it was aboard the "Apollo"). Now with "Flag Banking Officers" and "Sent to Flag" I'm not certain what the term refers to. Clarification?

Senior management, the entity that controls the funds known as "Sea Org Reserves." I suppose it's ultimately DM, whatever corporate entity nominally holds the purse strings.

"FBO" has meant both "Flag Banking Officer" and "Finance Banking Officer", the second being a contrived meaning after the first became widely non-applicable.

Paul
 
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