No matching fragments found in this document.
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 26 APRIL 1971RB
Remimeo Issue 11
Finance and REVISED AND REISSUED 27 OCTOBER 1982
FP Hats
Dept 8
Check Signers (Cancels and replaces BPL of
Finance Enforcement 26 Apr. 71RA, revised and
Officer Hat
FBO Hat reissued 16 Oct. 1975.)
(This issue was originally issued as an HCO PL written by CS-
3 and approved by myself, and adopted by the Board of
Directors. It was mistakenly converted into a BPL. Having
been requested to review the Finance Series PLs written by
others, Finance Series 5 is now reissued in its original form
with minor revision as an HCO PL.)
Finance Series 5RB
FP ACTIVATION
FP allocation amounts become due for transfer from the FBO No. I Acct.
to the Org's Main Account immediately following FBO approval of the FP and
allocation figure.
The FBO is generally watchful of the FP routing and handling lines and
prevents any undue delays.
With the FP approved and allocation amount established, the FBO issues
his transfer check AT ONCE rapidly obtaining the needed Finance Enforcement
Officer cosignature (where there is no FEO the D/FBO cosigns or if no D/FBO
either, then the CO/ED may be a cosigner) and delivers the check to the
hands of the Treas Sec.
The Treas Sec gives his receipt and sees that the allocation check is
banked AT ONCE to the Org's Main Account.
When the FP check has been cleared and been credited to the Org's Main
Account by the bank, the FP as approved may be activated by Division 3. NOT
BEFORE.
Checks drawn or POs activated against an FP for which the allocation
check has not yet been deposited or cleared amounts to spending money which
is not there and violates earlier policies and falsely affects the org's
cash/bills stats.
FSM commissions due for payment follow the same principle.
Dept 8 prepares all forms and related data and applies via the Treas Sec
to the FBO AT ONCE when such payments are due. The FBO rapidly verifies and
immediately issues a check to cover valid FSM commissions due. His transfer
voucher lists the names and amounts. FSM commissions are NEVER held up for
once-a-week check signing and where the FSM has personally brought his
selectee into the org and is due a commission it MUST be paid at once with
the FSM Account check given directly into the hands of the FSM by the org.
Org officers signing FSM checks from the FSM Account must see a copy of
the FBO transfer voucher, the selectee invoice and a copy of the selection
slip before they may sign the FSM commission check.
501
As it would cause delays on FSM commission payments to require that the
transfer from the FBO No. I Account be in the org FSM Account before an FSM
payment check can be issued, the FSM Account is started with a balance
equal to an average of one full week's commissions. After that, the routine
of transferring the amounts for commissions paid each day will keep the
account maintained at a level that commissions can be paid with no danger
that they will not clear the bank. When the volume of commissions increases
in range the org Dir of Disbursements should CSW to the FBO to transfer
additional funds to the FSM Account to ensure that its basic level is kept
sufficiently high to handle the traffic. The FBO would then transfer the
additional funds from his FBO No. I Account to the org's FSM Account. The
exact administration of the FSM commission line is covered in HCO PL 5
April 1979RA, NEW FSM (INSTANT PAYMENT) ACCOUNT.
That the FSM Account is handled as above does NOT mean that it may be
used as a "float" to pay out FSM commissions on a bypass of the FBO.
A check signer who fails to verify that the FBO transfer has been done
before signing checks against that transfer risks signing checks against
funds not there or allocated to other purposes.
CASH/BILLS
Cash/bills as reported by Div 3 includes sums actually on hand in the
org's accounts versus bills due and purchases newly ordered.
Thus a check signer accepting checks for FP activation without evidence
of FBO transfer also risks a falsely reduced cash/bills stat which gives an
untrue picture of the org's actual financial position.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright C) 1971, 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
502
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 10 MARCH 1971R
Rernimeo REVISED AND REISSUED 27 OCTOBER 1982
Finance Packs
FBOs
(Revised to update sections on FBO purposes and
statistics. Originally issued as an HCO PL adopted
by the Board of Directors and is hereby reissued as
revised as an HCO PL with the full authority of
policy. Does not include ALL FBO duties as some
were added subsequent to the original PL and will
be found in later HCO PLs. Some of these duties
have been delegated to the newly created post of
D/FBO for M.O.R.E. but are included here as still
overall under the responsibility of the FBO.)
Finance Series 6R
FBO HAT
This policy letter outlines FBO duties and actions as given in recent
issues and in early 1968 Flag Orders by which the post was initially
established.
ORG BOARD LOCATION:
1. The Finance Office is an autonomous office.
2. It is located on the org board in the Office of LRH, Dept 21.
3. Its authority stems from the ecclesiastical authority of the Church
hierarchy.
4. Its representative is called the FLAG BANKING OFFICER.
FBO PRODUCTS:
1. Management reserves, hugeness of.
2. Cash to management reserves in acceptable range and rising in trend.
3. Increased org solvency as indicated by an increasing allocation-
production ratio.
4. Int Finance Network programs, projects and orders quickly and
thoroughly and completely done.
5. Data and reports completed accurately and on time and sent to Int and
Continental Finance. Includes accurate and contemporary data to Data
Bureau Flag and Continental.
6. The competent and terminated handling of local finance situations
arising, by application of the related policies, and the reporting of
such to Int and Continental Finance.
7. Solvency of Flag in the area.
8. Financing of Flag projects and actions in the area.
503
FBO PURPOSES:
1. TO MAKE THE ORG MAKE MORE MONEY.
2. TO GIVE THE ORG A WELL-PAID STAFF.
3. TO MAKE IT VERY WORTHWHILE FOR FLAG TO MANAGE AND HELP IT.
FB 0 S TA TIS TICS..
1. Payments to Flag.
2. Allocation-production ratio in the org.
3. Payroll divided by staff.
IMMEDIATE SENIOR:
1. The immediate senior of an org FBO is the Continental FBO.
2. The immediate senior of the Continental FBO is the Int FBO located in
the Int Finance Office.
FB 0 DUTIES:
1. To establish and maintain the proper uses, titles and signatories of
the two FBO bank accounts, No. I and No. 2, on-policy.
2. To collect daily all sums of income from the org and to ensure that
all incoming monies are invoiced and banked by the FBO before any
allocation or expenditure may occur.
3. To ensure that any loans from SO reserves and any debts to it are
recorded as such.
4. To verify all sums collected by the FBO against the org's invoices for
that day, and to ensure that the org's invoices tape-totaled equal the
exact amount received by the FBO.
5. To issue an invoice of receipt to the Cashier or Dir Income.
6. To keep an FBO LEDGER into which all incoming monies are entered on
the left-hand page for that day, giving a total list of what the monies
are,
7. To enter separately (bottom, same page) and apart from current income,
any bounced checks returned from the bank that day, and any bounced
checks re-collected by the FBO.
8. To record on the opposite (right-hand) FBO LEDGER page for the same
day the exact disposal of the day's income-to the FBO No. I Account or
abroad for exchange.
9. To inspect the dates and endorsements and currency of all checks for
correctness before deposit.
10. To separate out any domestic nonconvertible checks from other
countries if such are received, to be sent by the FBO abroad for
exchange.
11. To make a deposit slip for the day's income being banked and a
separate slip for any bounced checks being redeposited.
504
12. To deposit all incoming monies daily to the FBO No. I Account.
13. To keep a consecutive record of bank deposit slips in a notebook or
bank deposit book provided by the bank.
14. To file a second copy of each deposit slip with the FBO invoices for
the week.
15. To package and label FBO invoices weekly to include the in-series
invoices and add-strip, a loose set of copies, the week's deposit slips,
and the bank debit advice for any bounced checks for the week.
16. To keep express and exact record of any amount sent abroad for
exchange and to follow up each such amount until returned. Such sums
having been once invoiced by Div 3 on receipt may not return via Div 3
or be reinvoiced on return from abroad as such introduces an error into
income.
17. To maintain enough float in the FBO No. I Account to cover any
bounced checks returned from the bank.
18. To collect daily from the bank any bounced checks.
19. To handle all bounced checks at once by urgent and personal contact
with the drawer, obtaining immediately a new check or the drawer's
authority to redeposit. It is a fast and urgent contact action with
Ethics in the offing.
20. To redeposit such sums daily by separate deposit slip to the FBO No.
I Account.
21. To ensure that bounced checks are collected only by the FBO and that
neither the bounced check nor the re-collection of it appear in org
records or org GI or Div 3 stats. A reinvoicing of bounced checks by Div
3 would introduce an error into income. The only org records these show
up in are the individual's accounts file and adding the amount collected
to the org corrected gross income.
22. To threaten legal action on any long-uncollected, bounced check and
if still uncollected to give the action over to Legal.
23. To report weekly to Continental Finance Office the amount of checks
bounced, checks collected and checks outstanding, with a copy to Int
Finance Office.
24. To collect weekly from the Treasury Sec a copy of the income sheets
posted up by dept heads from their service-dept copies of the week's
invoices.
25. To ensure that DEBIT invoices are also shown and clearly marked on
these sheets and to ensure collection of DEBIT invoices by Div 3.
26. To weekly summarize receipts and income sources of the org for the
org.
27. To search out org collection files and old invoices to detect and
revive any previous income sources no longer current or dropped in
volume.
28. To trace income sources to their successful promotional actions where
such info is available as factual (not opinion).
29. To present the Exec Council and Ad Council of the org with a factual
summary of org income sources, to include the current week or month and
copies of earlier reports and any past income sources newly discovered.
This is presented prior to financial planning and assists the Exec and
Ad Councils in preparation of FP.
30. To demand income increase from the org, particularly where past
successful income sources or collections have been neglected.
31. To know the vital necessities required by the activity to produce its
valuable final
505
products and particularly its income.
32. To maintain agreement with the FP body regarding Title A, B and C
expenditure and product necessities, and how these are covered by FP and
general finance.
33. To receive the proposed financial planning and statement of projected
income when passed as okay by the org Exec Council.
34. To inspect the proposed FP with regard to (a) expectancy of income
and the plan by which it is to be materialized and (b) the amount of FP,
and to allocate to the org accordingly.
35. To ensure that FP sums allocated by the FBO cause an increased
income, thereby giving an increased allocation-production ratio and an
increased statistic of cash to SO reserves.
36. To transfer sums of expense thus approved by check to the org's Main
Account.
37. To send to Int and Continental Finance Offices a copy of the approved
financial planning against which the allocation was made.
38. To transfer all HCO Account income to the org's HCO BOOK ACCOUNT.
39. To transfer to the org's CVB* Account any refund monies required.
40. To transfer to the org's FSM Account monies for FSM commissions paid,
these not being subject to financial planning.
41. To issue to the Treasury Sec of the org a voucher with each transfer
check, detailing the amount and intended use of the monies.
42. To recover from the org any allocation amount (except HCO Account
monies) not applied to the approved use. Sums allocated by the FBO may
only be used for the purpose requested and approved and if not so used
must be returned to the FBO.
43. To receive a copy of any EMERGENCY PO not covered by the org's
financial planning but vital to org credit or promotion or product, and
to deduct 125% of its amount from future allocation to the vessel or
org.
44. To deduct from future allocation 200% of the amount of any EMERGENCY
PO found to have been approved without any copy advising the FBO, or if
the expense presented as an emergency was not an emergency in fact.
45. To collect from the Treasury Sec a weekly disbursement sheet listing
all vouchers and sums paid out by Div 3 during the week.
46. To ensure that the Treasury Sec accounts for all monies issued to him
by weekly total of expenses and cash on hand against monies from FBO
that week.
47. To transfer by check from the FBO No. 1 Account, sums to SO reserves
and to the FBO No. 2 Account for management expenses incurred locally.
48. To see that amounts owing to management for services and missions are
collected from the org and paid in full.
49. To keep a separate invoice-voucher series for the FBO No. 2 Account,
including separate deposit slip records and invoice and voucher packs as
with the No. 1 Account.
50. To pay from the FBO No. 2 Account any international management
expenses incurred locally, keeping exact and express records of these.
506
51. To keep accurate and flawless record of all FBO receipts-banking,
transfers and disbursements-as required of any accounting activity by
standard Scientology accounts policies.
52. To make a brief weekly summary of receipts to and payments from both
FBO accounts, sending these to Int Finance Office and keeping a copy.
53. To keep and reconcile weekly an FBO CASH JOURNAL for recording of any
CASH amounts the FBO may hold on hand. A CASH JOURNAL and cash box are
only for the occasional CASH disbursements, usually in connection with
management expenses. FBO disbursements and transfers are normally only
by check.
54. To receive checks cleared from the bank on the FBO No. I and 2
Accounts and to tape these back into their original checkbooks onto the
check stub.
55. To collect from the bank a month-end statement on the FBO No. I and 2
Accounts and to reconcile each on receipt.
56. To tape-total, package and label monthly the FBO in-series vouchers
with a loose set of copies. FBO No. I and No. 2 Accounts each have their
separate voucher series and the vouchers are packaged up separately.
57. To make a full monthly financial report to Int Finance Office
summarizing all income to and transfers from the FBO No. I Account-to
include an attached copy of the month-end bank statement reconciled.
58. To make a full monthly financial report to Int Finance Office
summarizing receipts to and disbursements from the FBO No. 2 Account.
59. To include with this report a full statement of management expenses
paid locally, categorized as required by Int Finance Office, and to
include a xerox or carbon copy of all such bills paid and the voucher of
payment. Also attached is a copy of the month-end No. 2 Account
statement reconciled.
60. To provide the required weekly and monthly finance reports on time
and with total accuracy so that management and org solvency and
viability can be centrally summarized at the Int Finance Office.
61. To provide Int Finance Office with a copy of the signature mandates
for each of the FBO accounts and to provide revised copies whenever such
mandates are changed.
62. To keep FBO accounts and funds completely secure at all times
including an occasional check on bank security to ensure that only the
authorized signatures are accepted.
63. To report FBO statistics promptly and accurately to org OIC and to
Continental and Int Finance Office.
64. To provide Int and Continental Finance Offices with a stat analysis
of the FBO statistics at the end of each stat period.
65. To know and apply Scientology finance and accounts policies with
regard to allocations to the org and with regard to the FBO's own
accounting admin.
66. To act as a STABLE TERMINAL for Int and Continental Finance Offices.
67. To get Command orders and finance programs DONE quickly and
thoroughly and exactly and to include in the Compliance Report exactly
WHAT was done and the results.
507
68. To report Div 3 outnesses to FOLO and Flag Org Managers as well as
Int and Continental Finance Offices and to follow up the handling of
these.
69. To pick up and terminatedly handle local finance situations arising,
by application of the related policy. This is by DOING the handling-not
writing despatches.
70. To make a brief and concise weekly report of these, stating the
SITUATION and its HANDLING. These weekly reports go to Continental
Finance Office for relay to the Int Finance Office. A copy is made for
Flag and Continental Data Bureaux.
71. An FBO produces raised FBO statistics, and orders and programs
competently DONE, and reports completed accurately and on time, and
situations handlednot reasons why, and can'ts, and problems.
OVERALL APPROACH
The chief concerns of an FBO are income sources, income demand and
income increase.
It is factually the size of org income and the increase of allocation-
production ratio that determine cash to reserves.
This does not mean that he runs the org via financial management. He
does not.
But he does expect income increase and an increased allocation-
production ratio from what he pays out, and if he doesn't get it, he finds
out WHY. He finds his WHY in facts and figures, not opinion.
Org Managers can then take all this up along with other data affecting
management.
And if the FP members are well-hatted and the FBO knows his job and does
it, finance conflicts resolve and the results are expressed in rising
stats.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright Q 1971, 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
*[Note: CVB = Claims Verification Board]
508
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 19 MARCH 1971RA
Issue 11
Remimeo REVISED 14 SEPTEMBER 1981
All Orgs RE-REVISED AND REISSUED 27 OCTOBER 1982
FBOs
FP Hats (Cancels and replaces
BPL 19 Mar. 71.)
Finance Series 7RA
BEAN THEORY
FINANCE AS A COMMODITY
(Originally issued as an HCO PL adopted by the Board of
Directors and later reissued by the Board of Directors, this
Source data is hereby correctly reissued by the Founder as an
HCO PL.)
The allocation paid out by Finance to an org or activity must BUY
SOMETHING.
It buys more funds back from the activity than it paid out and it buys
the production of that activity.
Finance is best understood as a COMMODITY in terms of beans.
So many beans issued to an activity and so many more beans back.
Beans do not magically materialize into more beans. What brings back
more beans for those issued is the PRODUCTION and INDUSTRY of org staff and
how wisely the beans are allocated.
Even the interest one earns on a bank account is earned in fact by
someone's production and ability to get more beans out of an activity than
are put in.
Where Finance uses its beans to buy production and industry and
projected income at a cost which requires the activity to be viable, it
gets back more beans and a raised allocation-production ratio.
The first rule of Finance and any activity is INCOME GREATER THAN OUTGO.
Where Finance can skillfully apply this to the divisions and personnel
of an org as well as the org as a whole, the additional beans materialize
because what is bought is production and the products which add up to the
product of raised income and viability.
PRODUCTION
Activities that allocate by need and fail to force and pay for
production are the basis of failed economies and welfare states.
"We need. . ." is taken by Finance with a yawn unless followed at once
by a projected resulting valuable product or income realistically planned
and immediately in view.
Finance allocates against proven production and projected income.
The FBO looks at where the beans are going and what income and
production they are buying.
509
When he finds that the beans issued to an area or division are not
buying production or income, he designates a cap-in-hand status to that
area and the beans issued become those essential to product only until the
product emerges in the expected volume and quality.
One org with a soaring payroll particularly in the Tech area while
delivering less than five auditing hours per auditor per week had all on
full pay and bonuses. The org had finance troubles and found sums needed to
promote absorbed instead by high payroll.
How? The org was on fixed pay (high) and gave only small production
bonuses, obligating a high payroll expense without regard for production.
Other errors aside, the Finance error is an absent demand that the beans
issued to that area buy more beans or valid full capacity production.
A reversal of this, setting low basic pay and high production bonuses,
would have bought production for the beans issued and where there was no
production would have issued no beans or a bare minimum.
INCOME SOURCES
The apparency that income sources devolve upon certain single portions
of an org leads Finance into difficulty unless the products and subproducts
of the org and its divisions are fully grasped.
The tracing and reinforcing of income sources, while a necessary and
vital action, falls far short of the total action of Finance in its
investment of beans.
A company receiving income only after the fact of delivery would appear
to an inept or unfamiliar Finance person to have DELIVERY as its major
income source. If Finance then seeks to raise income by forcing all beans
into stepped-up delivery while neglecting the prior promotion and sales,
there is soon no demand and nothing to deliver and NO BEANS.
Income sources traced superficially to SALES expertise alone, neglecting
promotion and delivery again gives NO BEANS.
A Finance person seeing sales expertise as the company's immediate and
major income source quite rightly issues more beans to sales. But if he
leaves promotion and delivery underfinanced, sales suddenly finds itself
selling an unknown product due to absent prior promotion, and sales made go
undelivered or poorly delivered or even refunded.
Finance tracing income sources to promotion alone and neglecting to
follow up with sums to sales and delivery gives the same result.
Thus, in addition to org income sources, Finance and org managers must
know the valuable final products and subproducts of the org and its
divisions and posts in order to wisely allocate funds.
COSTING
Income greater than outgo applies equally to each division and person in
an org,
If Finance is fully familiar with the products of divisions and key
posts of an org and their costing and value to the completed org product
and expected volume or capacity, it can skillfully apply income greater
than outgo individually to each.
An org has valuable final products for which it collects income.
Each division and area of the org has a product or products which
contribute to the whole action which gets the org product promoted and
delivered and the income collected.
How much it costs to produce how much product is the COSTING of a
division or org or post.
510
It is not always possible to determine how much income a single post or
division contributes to the whole activity.
But one can know to what degree a subproduct is vital to the delivery of
the org's valuable final product and one can know how much it costs to
produce it. And one can expect each area and post to be productive and
viable as a single activity.
Costing to be real must also take into account the expected CAPACITY or
IDEAL SCENE of the activity.
A plant producing at half capacity yet fully manned and running at full
expense gives a product which costs twice what it should if the activity is
to be fully viable and profitable.
A costing of the Tech Division described above would show that with
production at 1/5 capacity, its product cost five times what it should cost
to be viable as an activity and profitable to the org.
Thus, funds allocated to an activity by costing alone will not buy or
ensure production or return more beans.
If one were allocating beans by income and products, he would have to
consider the COSTING of each product, the importance of each product (how
vital it is to the valuable final products of the org) and the expected
capacity or volume of each area.
One could juggle these about and assign an allocation value to each
product and subproduct and key stat.
So many letters out, so much bulk mail out, so many student points and
well done hours = so much allocation.
Under such a system the FBO would get production and more beans back for
the beans put in.
The Exec Council* doing FP on such an allocation would shortly see what
underproductive areas were causing a reduced allocation and would pound
those areas to produce. Likewise, the activities of productive divisions
and areas would be reinforced by the FP body.
What accomplishes this is NOT Finance acting as org management, but
Finance applying income greater than outgo to each division and area of the
org and handling money as a commodity of which one issues so much and gets
so much more back.
Finance becomes org management only where it ceases to handle finance as
a commodity like beans and where org managers themselves fail to grasp and
understand financial realities.
LOST INCOME
Financial planning is how one uses the funds one has to keep things
running well and make more income.
There is some degree of loss in a failure to prevent unreal and
unprofitable expenditure.
Orgs and FP bodies are sometimes improvident in their planning and
Finance people are alert for this and have to be because they quite rightly
expect beans back plus more for beans expended.
But the greater loss to Finance is income lost or never made.
The difference between what an org should be making and what it does
gives Finance greater loss than any FP saving could ever recover.
Foolish or unreal expense is prevented because it's a poor investment.
But an org of $50,000 income potential making only $20,000 is a weekly loss
of $30,000 to Finance.
511
An org stacking up thousands in collected but undelivered services gives
Finance a potential and staggering loss in sums refunded.
An org seeking to save ten shillings while neglecting to develop and
boom a continent doesn't make sense.
One knows the income sources of the org cold and one knows what
subproducts promote and sell and deliver and collect income.
One puts finance as a commodity first and most into these and never
saves on them except to raise the viability of a vital division or area not
producing well and then only to raise production.
One seeks new income sources and means while reinforcing those already
successful and reviving any no longer current.
One gets sums already owed to the org collected with industry and in
high volume.
One handles emergencies by making more money and has lined up three or
four valid income sources each and any one of which would provide the
needed funds.
One uses beans to buy raised income and production and refuses to
finance nonproduction or fruitless expense.
One knows cold the costing of vital and other org products and demands
full capacity production and viability and income greater than outgo of
each division and area and post of the org individually.
One predicts and plans for expansion occurring and the future adequacy
of materiel and quality of delivery before the sudden absence of adequate
staff or delivery facilities becomes a screaming urgency.
And one knows that more profit can be lost than ever could be saved on
expense.
Money is a commodity.
It is subject to certain realities. Its realities apply to the whole org
and equally to the divisions and persons in the org. Its realities have to
be fully grasped by Finance and FP members and org managers.
Handled by Finance people as a commodity of which one always gets back
from an area more than went in it, brings raised income, expansion and
reserves.
L. RON HUBBARD
Founder
Revision written at the request of the CHURCH OF SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright 0 1971, 1981, 1982 by L. Ron Hubbard ALL RIGHTS
RESERVED
*[Note: The words "Exec Council" have replaced the words "Ad Council" on
page 511, paragraph 11. This and the signature correction are the only
changes in the text of this HCO PLJ
512
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
Rernimeo HCO POLICY LETTER OF 8 JUNE 1971RA
FBO Hats Issue I
Int Finance REVISED AND REISSUED 27 OCTOBER 1982
Network
(Cancels BPL 8 June 1971R of same title)
(Revised to update the original HCO PL
and to make this a proper HCO PL with
the full power of policy.)
(Originally issued incorrectly as
Finance Series 6.)
Finance Series 8RA
FINANCE OFFICE ACCOUNTS
(R efs:
HCO PL 29 Jan. 7 1 R FLAG BANKING OFFICER
HCO PI, 17 Feb. 71 RA BASIC FBO DUTIES
Rev. 27 Oct. 82)
Finance Office No. I and No. 2 Accounts are in the local org's name but
are controlled by the joint signatures of the org FBO and Finance
Enforcement Officer who administer them strictly in accordance with the HCO
Policy Letters which govern their use.
Thus the FBO account names become: FINANCE OFFICE (org name) No. I
ACCOUNT and FINANCE OFFICE (org name) No. 2 ACCOUNT.
In the event of prolonged absence of FBO or Fin. Enforcement Officer
without deputy, the CO/ED may substitute as joint signer until such time as
a deputy FBO or Fin. Enforcement Officer can be appointed.
International signatories are
International Finance Director
JOINT SIGNERS
Int FBO
The checkbooks for these FBO accounts are securely kept by the FBO.
Weekly financial summaries on these accounts are made up by the FBO and
sent to Continental and Int Finance Offices. Monthly, quarterly and annual
audits on these accounts are the responsibility of Department 9, however it
also remains a Finance Network responsibility to see that these do occur
and to personally produce them in default of Department 9 with Danger
conditions assigned and enforced if such bypass is required.
TAX AND BALANCE SHEETS
The Finance Office No. I and No. 2 Accounts are part of org records as
regards tax and balance sheet preparations; the No. I Account representing
all org income receipts and transfers for org expenses, and management
fees, and the No. 2 Account
513
representing partial payments of management fees by means of local funds
placed at the disposal of Central Management.
While they are org accounts in this regard, both accounts are used
entirely at the discretion of the FBO. They have no part in org cash/bills
figures, and are not considered to be org funds in any other sense than for
accounting purposes.
L. RON HUBBARD
Founder
Revisions written at the request of the CHURCH OF SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright 0 1971, 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
514
HUBBARD COMMUNICATIO~
Saint Hill Manor, East Grinstea
HCO POLICY LETTER OF 23 SEP
Remimeo
17130 Hats
Item No. I of
F130 Hats IMPORTANT
To be WC 2
and star-rate
and in clay. Finance Series 9
FINANCE BANKING OFFICER PURPOSES
(His Most Important Policy Letter)
A Finance Banking Officer works for the reputation of himself and his
network as follows:
"An org with an FBO makes more money and has a better paid staff and
makes it more worthwhile for Flag to manage it than any org ever would
without an FBO."
This reputation is to be earned by the conduct and good sense of the
FBO.
Therefore the purposes of the FBO are
1. To make the org make more money
2. To give the org a well-paid staff
3. To make it very worthwhile for Flag to manage and help it.
FBO ABILITY
An FBO must know how to make money.
An FBO must know HOW an org makes money and keeps its reputation with
excellent delivery.
An FBO must know the policy expertise used in making money.
An FBO must know that "turning down FPs" plays into the hands of any
that wish the org to fail and that forcing in a proper FP allowing for
promotion and needful actions is the way to defeat counter-intention in the
org.
An F130 must know that expenses incurred in the future beyond the org's
ability to pay must be halted before the expense is incurred, not after the
org has been committed.
An FBO must realize that finance control is a primary point of
management authority and that this control must not be locally developed to
a point where Finance forms a hidden command line, unknown to management or
Flag. The F130 has no authority to permit new acquisitions or obligations
and no authority to dismiss personnel or cut off obligations without Flag
Commanding Officer approval. No one in the entire network from top to
bottom has any authority to change operating orders or policy and must
obtain such authority for specific cases only from those in actual command,
i.e., Commanding Officer of a Continental Liaison Office or the Commanding
Officer of the Flag Bureaux as major changes affecting basic planning are
command decisions. (Proper, future contracts, staff hiring and dismissals,
basic changes in the FP No. 1 of an org, are all command decisions, not to
be made in the F130 network. Things that are any future risk at all require
authority from the Flag Bureaux.)
515
An FBO should realize that he is well backed up and that his warnings
and suggestions are usually authorized by command channels.
An FBO must realize that one can pass endless regulations regarding
finance to block off efforts to escape from old regulations (as witness tax
people's problems), and that all new regulations will also be escaped. The
FBO to handle this should work instead to bring understanding and
cooperation into the org in matters of finance.
The FBO must know that lack of Word Clearing and hatting will make a
financially irresponsible org and must see that Word Clearing on all
finance policies occurs both in himself and in the org.
The FBO in doing his duty must work always to earn the reputation set
out and postulated at the beginning of this policy letter.
L. RON HUBBARD
Founder
LRH:nt.rd.gm Copyright 0 1971 by L. Ron Hubbard ALL RIGHTS RESERVED
516
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 22 OCTOBER 1971RC
Remimeo REVISED 9 JUNE 1979
All Execs RE-REVISED 27 OCTOBER 1982
Staff Hats
FBO & Finance
Enforcement Off Hats
Div 3 Hats (Re-revised to align with
FP Packs
GO Legal the new Finance Network.)
Finance Series 10RC
PURCHASING AND CHECK-SIGNING LINES MODIFIED
(Adds to existing purchasing and check-signing policies)
The effectiveness of financial control in orgs depends primarily upon
the degree to which financial and income-making policies are known and
applied by FP members, FBOs and Treasury personnel.
However, the effectiveness of the administrative lines which govern
purchasing and bills payment is also a vital factor.
Unless these lines are sharply IN, the FBO and Finance Enforcement
Officer and execs can be working full ahead to ease the org out of a tight
financial situation only to find new bills arriving that nobody heard of
before or that a printing press has just been ordered by the new purchaser
because "somebody told him to"!
When an org has reached a low cash/high bills situation, it may take
many months of careful planning to restore income and solvency.
And even when things are going well, the purchasing and bills paying
lines must be held under firm control to keep it that way.
Therefore, the following shall apply fully to all Sea Org and
Scientology Orgs, and
FOLOs:
1. All letterhead stationery in use by the Treasury Division must bear the
following statement:
"ANY EXPENSE COMMITTED IN THE NAME OF THE CHURCH MUST HAVE THE WRITTEN
AUTHORIZATION OF THE TREASURY SECRETARY OF THE CHURCH TO BE CONSIDERED
VALID AND PAYABLE BY THE CHURCH."
The word "organization" may be substituted for "Church" in any org where
corporate status may require it.
2. Every firm with whom the org does business and every new firm contacted
for purchasing or pricing must at once receive a letter from the Treasury
Secretary using this letterhead and introducing by name those persons who
are authorized to make purchases.
3. Such letters must promote our excellent credit standing and should make
clear that the persons named are the ONLY persons authorized to purchase
goods or services for the company.
517
This serves to make company policy known and prevents random persons
from running up bills.
4. Every personnel change within the org which causes a change of
authorized
purchasers must be followed at once by new letters to all firms advising of
the fact.
5. All expense commitment is by written order prepared by Dept 8, signed as
authorized by the Treasury Secretary, and shown to the business firm at the
time of purchase.
6. The Treasury Secretary in signing such orders must see the valid
PURCHASE ORDER for each item ordered.
7. Expenses such as utilities and postage and occasional others which
cannot be handled in this manner are nonetheless covered by ordinary
purchase orders or estimated purchase orders (EPOs).
8. All purchasing lines are routinely spot-checked by the FBO or Finance
Enforcement Officer for application of this policy letter and results
reported to International and Continental Finance Offices.
9. Long-distance phone and other such services can become an unexpected
source of sudden expense increase unless HCO requires a signed PO for each
long-distance call as required by HCO PL 15 May 1970, PURCHASE ORDERS, and
other utilities are watched for sudden increase.
10. All check signing on the org Main Account will be done once weekly by
usual signatories and in the presence of the FBO and Finance Enforcement
Officer. All checks must be tape-totaled and petty cash amounts limited.
The HCO Book Account is excepted in that Book Account checks may be
signed at any time and the FBO-Finance Enforcement Officer presence is not
required. Instead the D/FBO for M.O.R.E. is a mandatory signatory and
checks on this account may be signed at any time with the D/FBO for
M.O.R.E. held responsible to inspect Book Account records and the state of
the bookstore, bookstocks and book sales to ensure that Book Account
policies are being fully adhered to, including correctness of expenditures.
FSM Account checks are also exempt from the once a week check-signing
rule as FSM commissions must be paid instantly. Signing is by any two
available per-policy signatories.
11. The FBO and Finance Enforcement Officer in carrying out this duty
ensure that all check-signing and dateline policies are applied and that
all checks being signed have been properly authorized and do not exceed the
org's allocation and, in the case of FSM commissions and refunds, that
covering amounts have been transferred to the applicable org accounts by
the FBO so that org cash/bills is not falsely affected.
12. Current and unused checkbooks for the org bank accounts are kept by the
FBO in his safe and are issued to the Treasury Division only for weekly
reconciling, check preparation and the return of canceled checks to their
check stubs.
The HCO Book Account and FSM Account are excepted in that current HCO
Book Account checkbooks are kept by the D/FBO for M.O.R.E. in his safe and
the current FSM Account checkbook is held by the Treasury Secretary in his
safe. Unused Book Account and FSM Account checkbooks may be kept by the
FBO.
13. These policies may not be used in any way to delay valid purchasing or
bill payments but must be applied so that no delay occurs and so that
financial admin lines are strengthened and made more secure.
518
14. The enforcement and application of these policies is the responsibility
of the Treasury Secretary, who must personally groove them in with Dept 8
and again on any change of personnel. The FBO and Finance Enforcement
Officer are responsible for performing actions assigned them in this policy
letter.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright C) 1971, 1979, 1982 by L. Ron Hubbard ALL RIGHTS
RESERVED
519
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 9 MARCH 1972R
Rernimeo Issue I
FBO Hat REVISED 4 AUGUST 1983
Hatting Officer to
M4, star-rate and
have clay dernoed
by FBO
Finance Series 11R
INCOME FLOWS AND POOLS
PRINCIPLES OF MONEY MANAGEMENT
(This PL corrects any earlier PL where
there is any difference or conflict.)
(Revised to update and expand definitions)
POLICY
If a management unit such as a bureaux, a Continental Liaison Office, an
OT Liaison Office or any agent thereof such as a Guardian or FBO or Flag
Rep is any good, THE NEAREST SERVICE ORG WILL MAKE AMPLE MONEY TO PAY the
managing unit and HAVE LOTS LEFT OVER TO SWELL Sea Org reserves.
Therefore if the managing unit or activity next to a Central Org or
service org is "in funds" or "without funds," it is a direct index of
management quality as expressed in the stats of the nearest service org,
MAJOR ORG
For an OTL, the term CENTRAL ORG must have active use as applied to
their nearest major org.
For a CLO, an AOLA or AOSH is the nearest org, therefore its major org.
For Flag and top management, the Flag Service Org is the nearest service
org when considering financial support.
FLOWS
An OTL or CLO or bureaux must manage lesser orgs so they build up a
public that (1) services locally with these lesser orgs and (2) FLOWS
CUSTOMERS TO THE MAJOR ORG.
Thus field auditors-missions-small orgs-CENTRAL ORGS-SHs-AOs is THE FLOW
LINE without which the Central Org or top org will go broke,
If these lesser activities are kept prosperous and flowing persons
upward via the FSM system and other systems, THE LOCAL, CONTINENTAL and
INTERNATIONAL management units WILL BE IN CLOVER.
If this flow line is not made to operate that way, all will be awful. If
it does operate that way, all will be well.
A CENTRAL ORG, THEREFORE, MUST GIVE HIGHER (IN TYPE) AND BETTER SERVICES
THAN FEEDER ORGS.
An AO must give higher, better services than an SH.
Flag services must be higher in class than an AO's.
DEFINITIONS
Lack of precise definition as to what is income and what is "reserves"
has caused trouble in identifying activities and in this flow line of
management and income.
The main trouble it has caused is that a management unit, not having
precise
520
definitions and not knowing the flow lines (as above), reaches out to the
wrong "finance pools" for their support.
(Examples: A Continental CLO tried to live on management 10%s which were
not theirs [UKLO '71]. A CLO let the nearby AOSH go down and tried to live
off Flag [USLO '7 1 ]. A CLO let an AO go down, ignoring it completely
while building up only its most distant org [USLO '71]. A Div III would not
collect actively on huge debts because it could borrow from reserves [Flag
Admin Org '71]. An OTL ignored its nearby CENTRAL ORG and kept trying to
get its support from its CLO [ANZO '7 1 ]. The earliest example was a navy
admiral [Scoles] running the LA Foundation into the ground in 1950 because
he thought it should be supported by Elizabeth, New Jersey.) The WHY of all
these was lack of understanding of flow lines, and lack of definition of
income, expenses and reserves as different, precise money pools and
different types of orgs.
DEFINITIONS
The following is a summary of key terms used regarding Church of
Scientology finances. They refer to ecclesiastical management matters as
they relate to finances of types of activities or areas. They are not
intended to define the corporate structure of the Church.
THE SEA ORG: The elite religious fellowship within the Church of
Scientology. The Sea Org is not incorporated and is not part of any
corporation. Its membership is involved in Church management and the
delivery of the higher level services of the Church.
INTERNATIONAL MANAGEMENT- Consists of the International Watchdog Committee
and the International Management Executives (Exec Strata) and those units
DIRECTLY attached to them such as the international office of the Finance
Network. WDC covers SECTORS (entities such as Scientology Missions
International, Sea Org Orgs, Class IV Orgs, FSO, etc.) and is essentially a
policing and inspection organization which makes sure things get MANAGED.
The Executive Strata (and ED International) does not run orgs; it handles
the FUNCTIONS that orgs do. without regard to entities but coordinates the
functions in them.
FLAG: The main vessel of the Sea Org. Historically, the word "Flag" means
the Flotilla Commanding Officer and his personal staff and is of timeless
usage and is not new. When the operations and crew of Flag are stationed on
land, the term is sometimes modified to "Flag Land Base." It consists
primarily of a management organization (Flag Bureaux), a public service
organization giving the highest levels of services (Flag Service Org) and
an estates organization servicing public and crew.
FLAG SER VICE OR G: The main public service organization located at the
Flag Land Base. It is part of the corporation known as Church of
Scientology Flag Service Org.
FLAG BUREAUX: The management body located at the Flag Land Base which is
responsible for the management of the Flag Service Org (FSO), Sea Org Orgs
and
Class IV service orgs. It is basically a tactical unit running orgs on
evals done under upper echelons and is an execution arm for top level
management. It operates through FOLOs (Flag Operations Liaison Offices). It
is part of the Mother Church, i.e., the Church of Scientology
International.
CONTINENTAL LIAISON OFFICE (CLO): The SO office of a continent that manages
that continent. A CLO contains combined representatives of all management
entities (e.g., SMI, GO, etc.) represented as departments on the org board
and has a department which is a FOLO acting as the management link between
the FB (Flag Bureaux) and the orgs managed by the FB. A CLO would
coordinate all management units for that continental area. Continental
Liaison Offices are themselves put there and made to run in a coordinated
manner by WDC.
FLAG OPERATIONS LIAISON OFFICE (FOLO): A department in a CLO which deals
with the execution of planning and programs issued to it by or through the
Flag Bureaux. Their major purpose is to see that Flag planning becomes an
actuality in orgs in their zone of responsibility. The FOLO sees that orgs
are put there and manages them.
521
OPERA TION- TRANSPORT LIAISON OFFICE (OTL): The branch office of a CLO
managing the area or orgs assigned to it.
SCIENTOLOGY MISSIONS INTERNATIONAL (SMI): Scientology Missions
International is a church which acts as the Mother Church for missions and
is responsible for the direct management of the mission network. SMI
missions pay tithes, a portion of which is used for SMI expenses. SMI
reserves are part of SO reserves.
INTERNATIONAL FINANCE NETWORK The International Finance Network is located
directly under WDC. This network is responsible for seeing that finance
policy in the Church is adhered to; that organization assets such as
marketing, meters, books, tapes, cassettes, insignia and films are
safeguarded and utilized to drive business down on the orgs; seeing that
org staff are well paid; seeing that as a result of making orgs prosperous,
management is well paid, and is entrusted with safeguarding and increasing
Church reserves. It has representatives in continental areas and orgs. Its
overall objective is to see that there is an abundance of SO reserves,
THE CONTINENTAL FBO: The Flag Banking Officer and office engaged in the
financial management of a continental area. He is part of the Continental
Finance Office headed by the Continental Finance Director.
ORG FLAG BANKING OFFICER: The FBO attached to an org to help manage it
financially. He is under the Continental FBO.
SO RESERVES: Often miscalled "Flag reserves" or "management reserves" which
they are NOT. SO reserves are the amount of money collected over and above
expenses that is sent by various units (via FBOs and the Finance Network)
to central reserves bank accounts of Scientology corporations and trusts.
It is used for purposes assigned by the boards of directors or trustees of
such corporations and trusts and for NO OTHER PURPOSE. These are normally
employed for periods of stress or to handle situations. They are NOT
profit. It is not support money for "Flag" or "management." It is not
operating money (Examples: Huge sums were required to cover WW when under
attack and to catch the PUBS 1970 crash.)
CENTRAL RESERVES: Funds collected over and above expenses that are held in
reserve in bank accounts of Scientology corporations and trusts. Often
called SO reserves.
INTERNATIONAL MANAGEMENT INCOME: The total money collected for
international management and Flag Bureaux management services and products
whether paid directly or to Scientology reserves trusts. It includes funds
collected for training and processing delivered by international training
orgs and billings for missions, promo, etc. A portion of this goes to
support management operations and the remainder, and major portion, goes to
central reserves.
INTERNATIONAL MANAGEMENT EXPENSES: Total of all expenses for international
management and Flag Bureaux activities including comm, missions, training
programs, promo, crew welfare plus any other costs of units connected to
and supported by international management bodies.
CLO INCOME: A CLO is supported by funds from its nearest major service org,
by tours and Flag Service Consultant commissions and by such services to
orgs and other activities as training and packs. A maximum of 10% of the
CGI of the major org should be more than adequate to support the CLO, as it
should be making far more from its other income sources; and since if the
CLO is any good at management at all, the income will be high in that major
org. A CLO is expected to send far more to SO reserves than it consumes.
CLO EXPENSE: The total of all expenses for the operation of the CLO and any
units attached to it including mission expenses and comm.
OTL INCOME: The same as for a CLO. It should be supported by a maximum of
10% of the CGI of its nearest major org plus tours and Flag Service
Consultant commissions and income for other services provided to the orgs
in its area of responsibility. If it is any good, it will boom the nearest
major org and others as well. It has to boom others so they will feed the
nearest major org. It is expected to send far more to SO reserves than it
consumes.
522
OTL EXPENSES: The same as a CLO but for its own and attached units'
expenses only.
CLO1OTL RESERVES: Any reserves that may be built up locally through salvage
of former allocations or from current allocations.
CONTINENTAL FINANCE OFFICE EXPENSE: The Continental Finance Office expense
is paid by the CLO to which it is attached. Thus it must make lines flow.
It collects for SO reserves and management units.
FBO LOCAL EXPENSE: Paid by the org to which the FBO is attached. The org
FBO collects for SO reserves and management units.
LOCAL OR G RESER VES: The reserves built up by an org through salvage of
former allocations or from current allocations.
GOVERNING POLICY
The governing policy of finance is to A. MAKE MONEY.
B. Buy more money made with allocations for expense (bean theory). C. Do
not commit expense beyond future ability to pay.
D. Don't ever borrow.
E. Know different types of orgs and what they do.
E Understand money flow lines not only in an org but org to org as
customers flow
upward.
G. Understand EXCHANGE of valuables or service for money (PL Exec Series
3
and 4). H. Know the correct money pools for any given activity. 1.
Police all lines constantly. J. MAKE MONEY. K. MAKE MORE MONEY. L. MAKE
OTHER PEOPLE PRODUCE SO AS TO MAKE MONEY.
A small sack of beans will produce a whole field of beans. Allocate only
with that in mind and demand money be made.
A finance management which does not understand and USE these principles
will be like a driver who hasn't the tech to drive a car. He'll wreck it,
or not driving it at all will have no transport.
Money is a tech. IT FLOWS. Although one dollar looks like another
dollar. they may be from completely different places and mean completely
different things.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY INTERNATIONAL
Adopted as official
CSI:LRH:iw.gm Church policy by the
Copyright C 1972, 1983 CHURCH OF SCIENTOLOGY
by L. Ron Hubbard INTERNATIONAL
ALL RIGHTS RESERVED
523
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 12 MAY 1972R
Remimeo REVISED 27 OCTOBER 1982
Int Finance
Network for
Enforcement
(Revised to update the distribution
in light of the new Finance Network)
ETHICS
Executive Series 13R
Finance Series 12R
Personnel Series 25R
PTS PERSONNEL AND FINANCE
PTS means Potential Trouble Source. This is a person who is connected to
a suppressive person, group or thing. (For further data on PTSness see HCOB
24 Nov. 65, SEARCH AND DISCOVERY and HCO PL 27 Oct. 64 (reissued 23 June
1967), POLICIES ON PHYSICAL HEALING, INSANITY AND POTENTIAL TROUBLE
SOURCES.)
NCG means No Case Gain despite good and sufficient auditing.
A chronically ill person, whether the person is known to be connected to
a suppressive or not, is always found to have been so connected and PTS.
IT IS UNSHAKABLE POLICY HEREAFTER THAT NO PERSON WHO IS PTS OR
CHRONICALLY ILL OR WHO GETS NO CASE GAIN MAY BE ON FINANCE OR REGISTRAR
LINES OR IN TOP COMMAND POSTS OR AS HAS OR ETHICS OFFICER OR MAA.
TECHNICAL FACT
A person who is connected to a suppressive person, group or thing will
dramatize a "can't have" or an "enforced overt have" on an org or staff
members.
A "can't have" means just that-a depriving of substance or action or
things.
An "enforced overt have" means forcing upon another a substance, action,
or thing not wanted or refused by the other.
The technical fact is that a PTS person got that way because the
suppressive was suppressive by depriving the other or enforcing unwanted
things upon the person.
The PTS person will dramatize this characteristic in reaction to the
suppression.
Therefore, a PTS person as an ED, C/O, Product Officer, Org Officer,
Treasury Sec, Cashier, or Body Reg will run a can't have on the org and its
staff by
a. Refusing income
b. Wasting income made
524
C. Accepting wrong customers (like psychos) and forcing them on the
org
d. Fail to provide staff or service
e. Advocate overt products.
HISTORICAL
When staffs went on proportionate pay in the late 1950s, so long as 1
ran the orgs directly, the staffs made more money than before.
When 1 moved off these lines directly, the staffs began to receive less
money personally.
At that time it seemed to me that proportionate pay served as an excuse
to some in an org to run a can't have on the staff.
We knew that some Registrars could take money in easily and others never
seemed to be able to.
The technical reason for this has just emerged in another line of
research entirely.
In completing materials and search on Expanded Dianetics, 1 was working
on the mechanism of how a PTS person remained ill.
1 found suppressives became so to the person by running a "can't have"
and "enforced overt have." This pinned the PTS person to the suppressive.
Working further I found that a PTS person was a robot to the
suppressive. (See HCOB 10 May 1972, ROBOTISM.)
This research was in the direction of making people well.
Suddenly it was apparent that a PTS person, as a robot to SPs, will run
"can't haves" and "enforced overt haves" on others.
Checking rapidly, it was found that where finance lines were very sour a
PTS person was on those lines.
RECOVERY
PTS tech, Objective Processes, PTS Rundowns, Money Processes and
Expanded Dianetics will handle the condition.
However, one cannot be sure that it has been handled expertly in orgs
where a money "can't have" has been run as its tech quality will be low due
to an already existing lack of finance.
Only stats would tell if the situation has been handled fully.
Thus the policy stands. Handled or not handled, no person who is PTS or
who has no case gain will be permitted in top command or any lines that
influence finance.
Any org which has consistently low income should be at once suspect of
having PTS or NCG persons on the key finance posts, and an immediate action
should be taken to discover the PTS or NCG condition and replace such
persons with those who are not connected to suppressives or who do get case
gain.
Nothing in this policy letter permits any PTS person to be in an org or
cancels any policy with regard to PTS.
This policy letter requires direct check, close investigation and
handling of PTS or
525
SP situations on these posts that may go undetected otherwise.
NOTHING IN THIS POLICY LETTER PERMITS ANY KEY ORG POST TO REMAIN EMPTY.
NATIONAL
As a comment on something that may impinge on orgs and might affect
them, the FOREMOST reason for a failing national prosperity and inflation
is a personal Income Tax agency. This runs a vicious can't have on every
citizen and makes them PTS to the government. Individuals even begin to run
a can't have on themselves and do not produce. This IS the cause of a
failing national economy. It can be a factor in an org and must be handled
on the individuals so affected.
L. RON HUBBARD
Founder
Revision written at the request of the CHURCH OF SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright C 1972, 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
[Note: In addition to the updated distribution, the first paragraph of this
policy letter has been revised. That paragraph in the original policy
letter read as follows: "PTS means Potential Trouble Source. This is a
person who is connected to a suppressive person, group or thing. (For full
information on PTS see HCO PL 31 May 1971, Issue IV, revised 5 May 72, a
checksheet.)"I
526
[Note: The following issues, which were not written by L. Ron Hubbard, have
been canceled:
Finance Series 13
HCO Pl, 3 June 1972, Finance Series 13, PROMOTION ALLOCATIONS has been
canceled by SPD 41. Finance Series 13 Canceled. BPL 24 FEBRUARY 1977
CANCELED. dated 27 Oct. 1982.
Finance Series 14RB
Finance Series 14RB Addition
BPL 6 Jan. 1976, Finance Series 14RB, FLAG EXTERNAL EXPENSES and BPL 6
Jan. 1976-1, Finance Series 14RB Addition, FLAG EXTERNAL EXPENSES have been
canceled by SPD 67, FINANCE SERIES 14RB AND 14RB ADDITION CANCELED - FLAG
EXTERNAL EXPENSES AND FLAG EXTERNAL EXPENSES - ADDITION CANCELED, dated 28
Dec. 1982. The data in Finance Series 14RB and 14RB Addition is covered in
Int Finance ED 25, FLAG EXTERNAL EXPENSES, dated 29 Oct. 1982.
Finance Series 15R
BPL 8 Mar. 1973R, Finance Series 15R, PROMOTION has been canceled by
SPD 40, Finance
Series 15RA, CANCELLATION OF "PROMOTION," dated 27 Oct. 1982
Finance Series 16R
BPL 10 Nov. 1973R, Finance Series 16R, FBO NETWORK ORGANIZATION LOCATION
has been canceled by SPD 38, Finance Series 16R Canceled, FBO NETWORK
ORGANIZATION LOCATION, dated 27 Oct. 1982.]
527
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 20 OCTOBER 1978
Remimeo F130s AGFs All FP Members
Finance Series 17
TWO-BIT FP
A two-bit FP consists of lots of little items, but none of them will
make you any money.
I first ran into this in the UK. Orgs would buy a whole bunch of 25 bob
purchases and the FP would add up to 25,000 pounds.
You can put together a whole slew of two-bit purchases and they add up
to thousands of dollars without making any beans.
FP is not "how do we get some money from the finance authorities?" FP is
"how do we stay solvent?"
L. RON HUBBARD
Founder
LRH:pb.dr.gm Copyright Q 1978 by L. Ron Hubbard ALL RIGHTS RESERVED
528
[Note: The following HCO PLs, which were not written by L. Ron Hubbard,
have been canceled:
Finance Series 18RA
HCO PL 28 Sept. 1979RA, Finance Series 18RA, INTRODUCTION TO THE NEW
FINANCE SYSTEM has been canceled by SPD 39, CANCELLATION OF FINANCE SERIES
18RAINTRODUCTION TO THE NEW FINANCE SYSTEM, dated 27 Oct. 1982.
Finance Series 19RA
HCO PL 28 Sept. 1979RA, Finance Series 19RA, FBO AND TREASURY WEEKLY
REPORTS has been canceled by SPD 42, FBO AND TREASURY WEEKLY REPORTS-THE
NEW FINANCE SYSTEM-CANCELED, dated 27 Oct. 1982.
Finance Series 20RA
HCO PL 28 Sept. 1979RA, Finance Series 20RA, FINANCIAL PLANNING PROGRAM
NUMBER I has been canceled by SPD 13, Finance Series 20RA Canceled,
FINANCIAL PLANNING PROGRAM NUMBER 1, dated 11 Apr. 1982.
Finance Series 2IR
HCO PL 28 Sept. 1979R, Finance Series 21R, FINANCIAL DICTATORSHIP-WHAT
IT IS AND HOW IT WORKS has been canceled by SPD 43, Finance Series 21R
Canceled, FINANCIAL DICTATORSHIP - WHAT IT IS AND HOW IT WORKS, dated 27
Oct. 1982.
Finance Series 22RA
HCO PL 28 Sept. 1979RA, Finance Series 22RA, USAGE OF ORG BANK ACCOUNTS
has been canceled by SPD 44, Finance Series 22RA Canceled, USAGE OF ORG
BANK ACCOUNTS, dated 27 Oct. 1982.
Finance Series 23R
HCO PL 28 Sept. 1979R, Finance Series 23R, FBO NETWORK STATISTICS has
been canceled by
SPD 45, Finance Series 23R Canceled, FBO NETWORK STATISTICS, dated 27 Oct.
1982.1
529
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 28 SEPTEMBER 1979R
Rernimeo Issue XII
FBOs
Treasury Secs (CANCELS AND REVISES
EDs/COs
Board Finance HCO PL 28 SEPT. 1979, Issue XII,
Officers FINANCE SERIES 24, SPECIAL INCOME HANDLING.)
Registration
Personnel
Finance Series 24R
SPECIAL INCOME
There is a type of income called "special income." It is huge lump sum
income that might have to be returned. It can't be immediately delivered
and consequently can't be included in the CGI. It does count on the org GI
but must be deducted as part of the computation of CGI on the allocation
form.
The crux of special income is that it is huge lump sum income for
something that the org cannot now (and may not be able to in the future)
deliver.
There are many possibilities of what could be classified as special
income. A few of these are
A. A huge sum donated for the training of staff for a yet to be established
organization. The liability being that the funds may be requested to be
returned as "unused" before such organization comes into being.
B. A huge sum donated for services which the organization does not deliver
currently or which it may not deliver in the future. A specific example
could be someone wishing to donate to an organization for upper level
services which he hopes may be deliverable in the future at that
organization.
C. A huge donation for an unspecified service or services. For example, a
person donating his life savings to Scientology without having specific
services in mind but simply feeling it to be the best place for his money.
The org could then possibly be in a position of not being able to deliver
fully and in the future might be in a position where the person or even his
estate would request the funds back for services at a higher org or any of
a number of other things.
D. Variations and other possibilities exist.
The way special income is handled is by subtracting it from the org GI
in the CGI calculation and depositing it in a special account by the org
FBO specifically for this purpose. This account is to be known as the
Finance Office No. 3 Account. The signatories on this account are the same
as for the Finance Office No. 1 and 2 Accounts. The "special income"
account should be a high-interest-bearing account.
When an org FBO receives "special income" for deposit he should notify
the Reserves ED in the International Finance Office of the amount received,
its designated use and any other specifics connected with the matter.
Funds received and deposited as above are not considered org reserves
and may not be used for anything until the org delivers service against it.
Once the org delivers service against the "special income," the amount
delivered (and only the amount delivered) is added to that week's CGI for
the org and is available for allocation, while leaving the remainder (the
undelivered portion of the "special income") in the Finance Office No. 3
Account. Any interest accrued is to be sent by the FBO to reserves.
530
If "special income" is actually treated as special income as above, then
all will be well. If it is not handled in this manner, it can cause endless
trouble for an organization.
So treat these funds for what they are and it will make things smooth
for both the organization and the public concerned.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright a 1979, 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
531
mmr~
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 28 FEBRUARY 1980
Remimeo
Org Series 41
Finance Series 25
Executive Series 21
PRODUCTION AND ONE'S STANDARD OF LIVING
References:
BPL 19 Mar. 71 Finance Series 7
BEAN THEORY-FINANCE AS A
COMMODITY
HCO PL 9 Mar. 72 1 Finance Series I I
INCOME FLOWS AND POOLS
PRINCIPLES OF MONEY MANAGEMENT
HCO PL 27 Nov. 71 Exec Series 3
MONEY
HCO PL 3 Dec. 71 Exec Series 4
EXCHANGE
FEBC Tapes
(NOTE: I realize that management units, orgs and staffs are daily
pounded with false economic data. The real facts of life collide with much
false data. Such crippling data comes from many sources-school,
advertisers, government, bankers, propagandists, even parents who insisted
Johnny be a doctor so he could "live well" or set a horrible example
themselves. Many have had a hand in messing up people's wits on the
subject. It is a factor in inhibiting the individual prosperity of
executives, staff members and orgs. Where an area is not prospering, this
PL should be starrated on its people and the false data they have on this
subject stripped so that they then can prosper as they should.)
"Standard of Living" can be defined as the relative quality of a
person's or group's possessions, quarters, food, equipment, tools and
conditions of their area of work and existence. It is the state of the
person's living, including working, environment. Where its potential
continuance exists it is related to survival. It is a basic natural
economic law that personal production of VFPs and one's standard of living
are intimately related.
This applies to the individual as well as the team,
Where violations occur, inequities exist.
At a personal level one must produce in excess of his standard of living
just to retain and maintain it.
Actually, the "excess" means that because of overload, taxes, services,
plant, utilities, raw materials, machine and other costs additional to his
own work sphere, a person cannot expect to get the full value of his VFPs
all to himself. That is not economically feasible. The "excess" varies from
post to post and job to job but is never less than 5X minimum. In industry
it is considered to be at least 1OX to maintain company standards and
solvency. The "excess" can be very high indeed in some
532
industries. But in any case any idea that it should be one for one is
fatal. People who know little of economics or management sometimes propose
a worker should get the full value of his VFPs-but all work and all VFPs
require support services and to neglect these would quickly bring on
poverty. Even when working for oneself alone, these "excess" factors exist
and seldom drop below 5X as one still requires support services. Corrected
gross income divided by staff has to be at least 5X the cost of the
standard of living of the individual staff member for that standard to be
barely maintained. This does not mean staff pay should be 1/5 of that
figure. It means that all the things (pay included) that go into
maintaining their welfare and work environment would have to be covered by
1/5 of that figure. A fairly efficient and prosperous org with a hatted,
industrious, gung ho staff can very easily maintain quite acceptable
standards at 1/10 that figure. The actual cash value of every piece of work
done by a person can actually be calculated. It is intricate and tricky to
do and much subject to over and under estimation but it can be done. It is
not vital to do this but one might just be curious about it. If so, do it
for yourself. Thus VFPs can be priced against what they bring in as part of
the overall scene even when they seem indirect. All the above figures are
very rough and subject to variation but this gives you some idea of what is
meant by 66excess" in that law.
Where a number of people in a group or on a team do not produce VFPs in
excess of their standard of living they depress the standard of living of
the group or team.
Where some in a group do not only not produce VFPs but produce overt
products, they actively depress the standard of living of everyone in that
group or on that team.
Many economists and theorists seek to avoid that law. They do it to
gratify politicians or aggrandize some false philosophy whose true purpose
is suppression under other colors. But the law remains and its violation
breeds an epidemic of economic ills. Amongst such ills are inflation, super
bureaucracy, chaos with the marketplace and a decay of the civilization.
When a whole society demands a high standard of living and yet doesn't
concentrate on the personal production of VFPs, it is finished.
Products are the basis of a standard of living. They don't appear from
midair. They come from work truly done. Not from hope or false data.
It is a druggie's dream that machines, computers, under the dictatorship
will do it all. Machines can raise a standard of living by assisting in
production. But they can't do Man's living for him. Intelligently designed
and used, they permit, within limits, increases in population. But machines
are just tools. They have to be thought up, designed, built, run and
serviced and their raw materials and fuel have to be found and delivered
and their products promoted, delivered, used and often in their turn
serviced. The machine age was actually recognized as failed when world
leaders first began to urge population reduction on the planet to "improve
the individual standard of living." If machines were going to solve it all
why is the civilization now in such a steep decline? It took producing men
working in and with a machine age to make the society go. Not idle mobs on
welfare expecting a high standard of living while a few guys work their
guts out. Pie in the sky is nice but did anyone ever get to eat it? This
misinterpretation of the machine age was a heavy violation of the above
economic law. But the real harm of the machine age was creating a false
belief that one did not have to produce much to survive. This lowered
people's estimate of how much they would themselves have to produce to
survive, much less have a high standard of living. Factually one normally
has to work fast and expertly and in high volume to bring about any
acceptable standard of living for himself and his group. This is a point
the machine age obscures. But it remains vividly and demonstrably true.
An executive who works hard yet wonders about his own low standard of
living should look over his people to find those who are not producing VFPs
or who produce even overt products while yet demanding a living. They are
absorbing the potential raised standard of living of the group.
533
Where a group has a very low standard of living, it need only review the
above law and its potential violations to understand why.
One cannot, in fact must not, increase the standard of living of a group
in ways that violate the above law. It will eventually bring calamity on
that group.
In a society led astray by crackpot economics, violations of the above
law create a vast number of wrong examples. The rich (most of whom work
like mad) are seen as idle or even criminals. The best way of life is made
to appear to be idleness. One seems to be owed a living without any effort
on his own part. The producing worker should be fined by higher taxation.
These are not seen to be simply false data spread about to wreck the place
but are held as "truths." And in their wake comes a funeral for that group
or society.
There is even an economic theory spread about today called
"equalitarianism." It declares everyone should get the same pay and have
the same standard of living. It does not mention that anyone should do any
work. It holds that the better worker should not be better rewarded. It
would crash any society.
Then there is the "monetarist" who believes you can manipulate a whole
society with money alone. And no thought of any production. His answer to
production? (You won't believe this.) Decrease demand! In other words,
reduce everyone's standard of living!
Basic economics eventually catches up with all these weird false
pretenses. It may take time but, as in the law of gravity, the apple
eventually falls no matter how many crackpots advance theories to say it
can't fall, will go up, or vanish. Real basic economic laws are like that.
They catch up. So don't wonder about inflation and depression and decayed
civilizations. Basic economics caught up with the crackpots.
An executive has to pay attention to the basic law about a standard of
living. If he doesn't pay close attention to it, the standard of living of
himself and of his group will cave in.
He can be "a good fellow" and seek popularity by attempting to raise the
standard above what is earned. He and his group will crash.
He can be foolish and seek to raise his own rewards above what he
personally is earning in terms of VFPs. But both he and his group will
fail.
He can ignore the real producers of the group and not see that their
standard of living is comparable to their individual production. And he and
the group will fail,
He can ignore the nonproducers and the overt product makers and by so
ignoring them, tear his own and the group's standard of living to bits.
He can listen to a bunch of PR from a staff member about how valuable
that staff member is and surrender to it without ever really counting up
the real VFPs that staff member is not producing (or even preventing). (It
happens.) Only real VFPs count.
He can work himself half to death without demanding production from
others and have his own standard of living crash.
There are swarms of false data flying about today on this subject. It is
taught in schools, the very best schools; it is heard on the radio and seen
on TV and in the papers. The civilization, as it caves in, is blinded by
literally thousands of false ideas about what and how a standard of living
occurs. These, where they conflict with the basic law, actively prevent one
from prospering as they blind him to the truth of his scene.
In an org or management unit in Scientology, the real VFP is valuable
fine people who produce valuable final products who then make up a valuable
fine public. Every piece of work and duty in a management unit or an org
contributes to that.
534
The standard of living of an executive, a management unit, an org or a
staff member is determined by that one basic economic law: The personal
production of VFPs for the group and one's standard of living are
intimately related.
L. RON HUBBARD Founder for the
BOARDS OF DIRECTORS of the CHURCHES OF SCIENTOLOGY
BDCS:LRH:ab.gal.gm Copyright a 1980 by L. Ron Hubbard ALL RIGHTS RESERVED
Finance Series 26
[Note: HCO PL 15 May 1980, Finance Series 26, SCIENTOLOGY FINANCE NETWORKS
-CLARIFICATION OF DUTIES, which was not written by L. Ron Hubbard, has been
canceled by Scientology Policy Directive 46, Finance Series 26 Canceled,
SCIENTOLOGY FINANCE NETWORKS -CLARIFICATION OF DUTIES, dated 27 Oct. 1982.]
535
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 18 FEBRUARY 1982
Remimeo
Finance Series 27
CHANGING WORKABLE FINANCE SYSTEMS
(Note: I have not been on finance lines for many years. But I was the
first Flag Banking Officer. I evolved the hat out of a morass of confusion
an area had fallen into and pulled the area out and it thereafter
prospered. The hat of FBO was passed on to others and, when worn the way it
was designed (covered in Finance Series 1), orgs and staffs have prospered
and the public has attained far better service. Although it is not my job
and although I receive no recompense, I recently observed some strange
outnesses in org finances, simply by looking at some stats. I have a good
record of making orgs solvent and prosperous and I was always the one to
instigate bonuses and improve staff pay and I could see, by indicators,
that these points were not optimum today. So I suggested to those in charge
of things now that they investigate. They did. They found something that is
quite new in orgs-some instances of dishonesty. Today we live in an era
where the psychologist teaches the blessings of being a crook: All men,
they say, are basically dishonest and that it is only a question of how
much temptation is required. Of course, that is a lot of you name it. But
where some person, newly off the street, gets a post and, having been
taught in psychology-dominated schools since he was five that he was
natively a crook, orgs can get areas of dishonesty. There is, of course, a
pitiful side to this: The poor blank sets himself up for no case gain and
may even be consigning himself to no new life: Overts against Scn recoil
casewise and that's not just propaganda. Those in charge found these areas
and the instigators have been shot from guns. But I think, as a favor to my
friends, I had better write this up. You may have been curious why, when I
went off the lines, things went wrong. Well, here's a lesson.-LRH)
Beware of people who change workable finance systems.
In the past two years at least three instances have come up where
finance systems had been changed to everyone's detriment.
The first of these goes way, way back. We used to have a very workable
finance system as given in Finance Series I and 11. It was the FBO NW.
Everything got along fine: It was relatively simple. Where there was an
FBO, orgs got solvent and staffs got paid.
Then Herbie Parkhouse, DGF WW, got on the line. He used a tax report
flap and other means as excuses to push the FBO system out. The reason for
his changes was evidently personal power. Org solvency declined, staffs
went into apathy over inability to control their income, international
reserves went down.
The system is being reverted now and Parkhouse has been shot from guns.
But the cost to orgs and staffs was staggering. If they had not been
arrested they could have crippled Scientology. And these losses came right
out of your pocket!
The second instance was an independent unit. It did specific production
items. When no one was looking, the person in charge of it changed all the
internal finance lines: This involved the wipe-out of all FP and every
financial control. Her husband was the Treasury Sec and he and his staff
then were able to embezzle huge sums of money. Production "costs,"
unwatched, soared. The products became overt products of little use to
anyone. The losses were staggering.
536
These criminals are now under charges and will wind up in jail as the
evidence is very plain. They were all failed cases (naturally, for who can
get gain across such overts) and had other out-ethics situations around
them. But the fact remains that here again some people changed a workable
finance system for personal reasons. The system has been reverted but it
caused an awful lot of loss in many other ways than money and the reward
was jail bars.
The third instance has just come up. At first glance it seemed a small
thing but on further look it became very big.
GI in a large org was always counted as "money actually received in the
shop before 2 P.m. Thursday." Someone changed this policy to read, "money
that will possibly be invoiced anywhere in the world, even on the other
side of currency control borders." The result was false GI you would not
believe. Other out-ethics things came right in behind it such as wrongly
crediting pcs to their advantage so as to make the GI look bigger.
Of course certain people would personally benefit. Anyone whose bonus
was tied to GI in any way would be enormously overpaid.
The situation is under handling and with big long teeth by the proper
authorities, but the fact remains that once again a finance system was
changed so that someone could personally benefit and rip it off.
So you wonder where the staff pay got so undermined. And why financially
things went somewhat sour.
All these things are handled and the systems are being reverted. But you
can learn from this:
BEWARE OF ANYONE PROPOSING A CHANGE IN ALREADY WORKABLE FINANCE SYSTEMS.
Be very careful it is not being done to bring about a personal rip-off.
The org and YOU are the ones who suffer from this. You would not stand
still for a squirrel change in workable tech. Tech works. Why tolerate
changes in workable finance systems?
BE ALERT!
L. RON HUBBARD
Founder
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:bk.gm Copyright Q 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
537
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 17 MARCH 1982
Remimeo
Finance Series 28
FBO FP ADJUDICATION
A monitoring point in the FBO's judgment of how much to give the org for
its FP is how much is the org delivering.
The FP should really not be more than the org's VS1). VSD is a
reflection of how much the org is delivering.
If the org's VSD is high, and high consistently, then the org is in good
shape and will probably continue to be in good shape and worth investing
into. It is worth it to the FBO to invest his beans into such an org.
If the org's VSD is low and consistently low, then the org is in poor
shape and likely to be in worse shape. Putting beans into such an area is
not a good investment for the FBO.
The FBO must not let the org run on unearned income, and income
collected on which service is undelivered is really unearned income. The
org hasn't really earned it, the org merely collected it.
What is meant here is NOT that every penny collected by 14:00 hours
Thursday should be delivered by 14:00 that same Thursday. Of course it
would not be. But on the average, week after week, an org should be
delivering at a rate matching what it is collecting. Otherwise, it will
build up unused APs. And an org certainly should NOT be spending more than
it is delivering.
It is not important if this week it spent a little more than its VSD as
long as next week it spends a little less. An org must not be permitted to
spend ON AN AVERAGE more than its level of delivery.
This is a point of FBO judgment. His adjudication is "Is this org
running consistently on more than the dollar value of what it is
deliveringT' If so, that org is going to starve. "Is this org running
consistently on less than the dollar value of what it is deliveringT' If
so, then that org is in good shape, and there will be coffee and cakes for
all.
L. RON HUBBARD
Founder
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright 0 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
538
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 15 APRIL 1982
Remirneo
Finance Series 29
THE COUNTING OF GROSS INCOME
(Ref: HCO PL 5 Jun. 59, Vol 3, pg. 8, INCOME REPORTS REQUIRED.
"These reports [departmental income reports] are compiled by department
heads after Thursday at 2:00 P.m. on the week's income ending then.")
(Ref: HCO PL I I Dec. 62, Vol 1, pg. 323, OIC REPORTS TO HCO WW.
"The HASI week operates from Thursday 2:00 P.m. to the next Thursday
2:00 P.m. This is mandatory for all orgs without exception, from here
on.")
(Ref: HCO PL 6 May 64, Vol 3, pg. 17, ACCOUNTS POLICIES.
"The accounts week closes at 2:00 P.m. Thursday, at which time a new
accounts week begins.")
(Ref: HCO PL 6 May 64, Vol 3, pg. 18, ACCOUNTS POLICIES.
"Posting [of disbursement vouchers in ledgers for the companies
concerned] is done in periods of one week ending 2:00 P.m. Thursday to
agree with the income period.")
(Ref: HCO PL 12 Oct. 66, Vol 1, pg. 344, OIC GRAPHS.
"Graph 2-a continuous line which shows the number of Clears made that
week [Thursday 2:00 P.m. to Thursday 2:00 P.m.] and a dotted line [when
it comes to apply] showing the number of OTs made.")
(Ref: HCO PL 23 Dec. 66, Vol 3, pg. 265, ACCOUNTS INVOICES.
"Bundles of invoices are routed to their proper destinations from the
baskets when convenient but at least once a day and at 2:00 P.m.
Thursday.")
(Ref: HCO PL 18 Nov. 67, Vol 3, pg. 212, BLUE AND GREEN ACCOUNTS INVOICES.
"The green invoices will be kept continuous and removed from the
machines at the end of each day and at 2:00 P.m. Thursdays. The money
will be removed at the same time [leaving only the float].")
It might interest you to know why an org's income production period,
measured by the gross income statistic, is a weekly period, from 14:00
hours (2:00 P.m.) Thursday of one week to 14:00 hours of Thursday the next
week.
IMPORTANCE OF THE GI STAT
It is complete folly to run or try to manage by anything but correct
stats. Rumors, bad or good, kill orgs. Generalities, bad newsy or good
newsy, kill orgs. Old school tie popularity, or lack of it, kills orgs.
Running an org or managing an org by anything but stats kills the org.
Running by stats shows one the state of the org and enables one to do
something about a down statistic and reinforce an up statistic.
539
NEVER RUN OR MANAGE BY ANYTHING BUT STATS.
CORRECT GI STAT
The GI stat must be correct and must honestly reflect the org's income
production.
No one can bank money "enroute to the org, but not here yet." No one can
FP against money "lined up." And you cannot be paid from sums that "will be
here soon."
But you can bank, FP against, and pay yourself from real money, good
right now, that is in the shop right now.
A GI statistic that is made up of anything but cold, hard, bankable
currency, bankable immediately, and in the shop right now is a false
statistic, denying you a paycheck and blocking those who would attempt to
expand the org.
NEVER REPORT, RELAY, OR CONDONE A FALSE GI STATISTIC.
TRENDS
Orgs are managed by trends and ranges of statistics. Is the trend of
this statistic up or down? What is the condition of the trend? And at what
range?
Weekly statistics, neatly graphed, shows one and all the condition of
the continent or org or division or department or section or unit or
individual staff member.
Why weekly?
Because our orgs are fast man! Other organizations and companies
throughout the world work at a snail's pace compared to any Scientology
organization.
How would you like to find out how you were doing at three-month
intervals, a month or so after each interval? Yet this is common business
practice!
It's no wonder governments go broke and talk of budget deficits and
corporations cackle proud as peacocks about how they only lost 30 million
less than they lost last year this time.
No, thank you! Nineteenth century "business practices" will not do for
us. You must know how you're doing right now and you must know how you did
this week compared to previous weeks. Only then can you take measures to
correct or reinforce, in order to improve or raise next week's production.
Why 14:00 hours Thursday?
I instituted this at London Org in the '50s. Friday was too late for
their Advisory Council to act on the just ended week's statistics, and get
the gears rolling for the new week as the weekend (and the Foundation org)
was right upon them.
By meeting on Thursday they could put their plans into motion Friday and
get started. 14:00 hours was the chosen cutoff period to enable them to
meet that evening.
That procedure worked then and for decades since!
Only when an org goes out-ethics and varies its stat ending period from
14:00 hours Thursday do you have trouble managing by stats and trends.
YOU CAN ALWAYS DO SOMETHING ABOUT A STAT TREND. BUT YOU HAVE TO KNOW
WHAT IT IS.
UNUSUAL SOLUTIONS
I can't imagine any org staff member or executive failing to understand
any of the above. This is all hard-won experience and established policy
which should be known to all.
540
Nevertheless, one encounters the "strangest" applications of unusual
solutions anyone ever heard of. And every time an org tries to count its
gross income in a way other than as described above, the org and its staff
suffer.
For example, there were "postulate checks" in the early '70s in which
some orgs counted nonexistent funds as in-the-shop GI, while swearing to
one and all that, "90% of them are good. The FBOs just aren't collecting
them."
Result: Frozen accounts, busted boom!
An org one time sought to "raise its GP by transferring sums back and
forth between accounts, counting these transfers as income.
(Well, that's just grand for the double-entry finance "wizards of Wall
Street." "Improves" their balance sheets remarkably. But it doesn't prevent
one giant corporation after another from slipping away to bankruptcy.)
Result: The org went insolvent!
Another org sought to "raise its GI and booksales" by "buying" its own
books (they transferred from their main account to the HCO Book Account and
counted it as GI), and then gave the books away.
His "majesty," Lord Keynes, would cheer with gleeful approval. But
unfortunately there's a hitch. Unlike the Keynesian dupes, governments, we
don't haul out the presses and print more currency. And books cost us real,
earned, in-the-shop money.
Result: This org, too, went insolvent!
And then there was the org that reported its GI on Thursday, waited for
it to come in by Sunday, and worked all weekend to make sure it did come in
Sunday so that what they reported last Thursday would be correct!
They were spending three days (sometimes more) of the new week to make
good the production of the previous week. This left them with about four
days of production time to devote to the new week's GI.
But not to worry, they had this solved!
"We have until Sunday to get in next week's GI, that we report on
Thursday, and GIs and CGIs can easily be reported a week behind based on
Sunday night collection figures."
Oh yeah? One might ask, "But how can you allocate funds at the weekly FP
meeting on Thursday night when the funds are not going to be there until
Sunday night?"
"Oh, that's no problem. That's why we hold FP on Sunday."
Digging deeper, one might ask, "But that means you can't get going on
activating the org's FP and get the items required by the org to carry on
until Monday."
"Well, yes, but that's because the money doesn't come in until Sunday,
and we don't want to be nonstandard, so. . . ."
And now, jumping in with both feet, one asks, "But, look! Ron just wrote
this new HCO PL, Finance Series 27, entitled CHANGING WORKABLE FINANCE
SYSTEMS, in which he says to, 'beware of people who change workable finance
systems.' And what you've done is changed a workable finance system!"
"I know, but see this CSW here? We're going to change that PL....
UNUSUAL SOLUTIONS
All right, where does all this leave us?
541
THE MOMENT YOU VARY FROM THE EXACT, STANDARD, ON-POLICY PROCEDURE, YOU
INVOLVE YOURSELF IN POTENTIAL CONFUSION THAT REQUIRES EXTRAORDINARY
SOLUTIONS.
WHEN YOU FIND YOURSELF BEING ASKED FOR EXTRAORDINARY SOLUTIONS, YOU HAVE
DEPARTED FROM THE EXACT, STANDARD, ONPOLICY PROCEDURE.
Note these two principles well. Chisel them in granite. They amount to
Third Dynamic Axioms.
What is the exact, standard, on-policy procedure?
1. The stat period of an org is from 14:00 hours Thursday to 14:00 hours
Thursday
the following week. Not Friday, not Sunday. Thursday. Not 18:00 hours,
not
14:10. 14:00 hours.
2. Gross income of an org is the total amount of cash, coin, checks,
money orders, cashier's checks, bank drafts, that are immediately
depositable, received by the org in the mail, over the counter or wired
directly into the FBO No. I Account, by 14:00 hours Thursday, for any
org service or item.
3. The GI figure, already counted, totalled, and verified, is telexed on
Thursday as part of the org's OIC cable.
4. FP Committee meets Thursday night.
5. The FBO approves the FP or sends it back for corrections /changes
(but in any case, makes the FP approvable), transfers the FP amount, HCO
Book Account amount, and the org reserve amount to the org Thursday
night or Friday morning.
6. The org deposits the FBO checks Friday morning and activates the FP.
7. The org is already (as of 14:00 the day before) collecting the new
week's gross income.
Sounds simple, doesn't it? It is!
It is difficult or confusing only when it is made difficult or confusing
by those who have other fish to fry, usually for their own selfish benefit
at the expense of the org and thus your own paycheck.
If you want a higher gross income, if you want the things your org
needs, if you want a larger paycheck, just do the usual as laid out above.
Honestly, it is so much easier to be standard.
Try it!
L. RON HUBBARD
Founder
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright a 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
542
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF I I MARCH 1982
Rernirneo CORRECTED AND REISSUED 21 MAY 1982
Exec Hats
Finance Hats (Correction in this type style)
Marketing Series 17
Finance Series 30
PROPORTIONATE MARKETING
In marketing, one must always push harder toward the largest bulk of
future business. It is peculiar to Scn marketing that you have to push
hardest at the lowest levels to make the upper levels come off.
This gives you a sort of scale that tells you the target proportion of
finance and effort to allocate in marketing.
For Scn and types of orgs, it goes like this:
Heaviest: Raw public not yet into Scn.
Next heaviest: First services they will take.
Next heaviest: Into HGCs and Academies.
Next heaviest: To SHs.
Next heaviest: To AOs.
Next heaviest: On to Flag.
You can also draw a scale of this for individual business or orgs of any
class.
It can be done simply by how much money and personnel and pieces are to
be devoted to each point of the scale.
Failure to do this gives one faltering stats as the flow is not being
proportionally marketed. Done correctly, one gets a very heavy and quite
even flow up the Grade Chart. Doing it unevenly, one gets booms,
depressions, and instances of cannibalizing.
L. RON HUBBARD
Founder
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright a 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
543
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 19 MARCH 1982
Remimeo
Finance Series 31
Marketing Series 19
Executive Series 35
EXECUTIVE SUCCESS
"The whole story of marketing is told in just a few words:
ONE FINDS OR STRENGTHENS OR CREATES A DEMAND.
"The whole story of economics is told in a few words:
ONE SUPPLIES OR DOES NOT SUPPLY A DEMAND AND GETS ADEQUATELY PAID OR
DOES NOT GET PAID FOR IT.
"The speed with which one can collect information, debug, write
immediate bright, applicable, doable programs or evaluations on each area
that will handle marketing, economics, delivery and collection and, above
all, the speed with which one can get out letters, despatches and telexes
based on the programs and get real dones on them back determines the volume
of income in any given time period.
"And that's the full essence of executive success."
L. RON HUBBARD
Founder
Assisted by
Operations Chief
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:OC:kjm.gm Copyright @ 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
[Note: The original mimeo copies of this policy letter were incorrectly
numbered as Executive Series 33.]
544
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 9 MAY 1982
Remimeo
Finance Series 32
BOOKS ARE ASSETS
Books, meters, cassettes, films and insignia are assets.
The operating principle is: Just as you would handle money, so must be
handled books, meters, cassettes, films, insignia and material.
There is a difference: Money decreases in value-books increase.
But just as an FBO would not think of letting money be around,
unguarded, just as he would think it vital that sums be listed and cross-
checked, so should he think of books and related items.
In an area where books have been ripped off, it will be found quite
difficult to get people to keep up-to-date stock lists. They know they
could be detected and sent to jail for stealing if it was detected they had
been ripping off books.
So it requires just as much policing on lines to handle books as it does
to handle money.
Orgs can get themselves into a bind by not accurately accounting for
stocks.
They suppose that the money they take in for selling books, etc., can be
spent on their FP any way they please. Soon they will run out of books and
have no money to replace them and there goes their local dissemination and
there goes their overall GI. In short, they cut their own throats by trying
to run their org using the booksale money for other things.
This was so bad in early years that it was thought orgs could not be
solvent unless they used up all money taken in from books on other things.
There is another angle to this safeguarding material: That which people
can rip off they do not respect. If they do not respect books and material
they will not only not sell them, they will also black PR them. And there
goes their public goodwill and their GI.
It has been said a single Dianetics or Scientology book is more valuable
to the human race than the discovery of the wheel or fire. That is because
it could halt Man's own decline and personal demise. Be that as it may, one
single book or meter gone astray in the stock inventory can seriously dent
the org profit received from books.
It is a profit and loss thing: Lost stock not only denies profit, it
also creates indebtedness. The books won't balance. But in this case it is
worse: If books and material do not exist to be gotten into public hands,
there is no prayer of continuing an org GI.
So carelessness or inattention to book material can whittle down and
then destroy the org GI.
This is why books and material and HCO Book Accounts are now under the
supervision of the FBO Network.
545
Routinely, full inventories must be taken of all such material.
And at a change of executive structure, an outside firm must be gotten
in to do a certified inventory of the material and new executives and
officers must sign for it in any turnover. And in the event stocks are
missing, the FBO must be prepared to take police action just as he would if
money were missing: He would suspect embezzlement and act that way. Thus
day-to-day stock lists must be kept and inventories must be balanced with
invoices routinely.
Where consignment, without cash, is done to an outlet, then a full
receipt for all such assignment must be gotten AND checked up on AND the
money or the stock collected in due course.
The Pubs Orgs must never operate on a credit line to orgs. In the past
this has caused insolvency and denied the placing of books in public hands.
An org, to get book stocks in such event, has to make cash money or GI to
get books or borrow the money elsewhere and pay it back.
Books, meters, cassettes are BIG business. Regarding them as a sideline
can be fatal to GI. It is the book in public hands which starts any boom,
regardless of any other promotion. The books are the ambassador and
messengers to the world. This has been proven countless times from 1950
forward.
This does not mean books, etc., must not be backed up by other
promotion. But it is the book that closes. Try to operate without them and
an org falls flat on its face!
This does not mean books, meters and cassettes should not be displayed.
It is a maxim that when the public sees just one book or meter on a shelf
they do not buy. And it certainly does not mean that books are not sold in
volume.
It does mean that books, meters, cassettes, tapes, films and insignia
are assets greater than hard money. And they must, from the moment they
come off the press until they arrive in public hands, be treated as such,
counted, inventoried, stock listed.
The FBO Network I/C is responsible for implementing this PL and
originating routine report forms and admin that must be kept and submitted
regularly to him on this subject.
And he must be prepared to take action of the strongest kind, just as he
would in any other form of embezzlement, when he finds stocks missing.
It is vital to the survival of Dianetics, Scientology and orgs that this
PL be given the closest attention. For one is dealing with the future
health of orgs.
There is no sin in making high income from books and material
themselves. Just like money, it is a crime to waste it.
A primary cause of slow expansion of Dianetics and Scientology in the
world has been a carelessness from Pubs Orgs on down to orgs and FSMs in
pushing and safeguarding books.
This trust is now given into the hands of the FBO Network as they have
shown
over the years they can be trusted.
L. RON HUBBARD
Founder
Adopted as official
CSI:LRH:bk.gm Church policy by the
Copyright 0 1982
by L. Ron Hubbard CHURCH OF SCIENTOLOGY
ALL RIGHTS RESERVED INTERNATIONAL
546
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 27 JULY 1982R
Remimeo REVISED 20 SEPTEMBER 1982
(Revised only to change the title of the D/FBO, per Finance Series 35, from
D/FBO for Marketing, Meters, Books, Tapes and Films to D/FBO for Marketing
of Org Resources for Exchange [D/FBO for M.O.R.E.], and to add some
additional references.)
Finance Series 33R
DEPUTY FBOs FOR MARKETING OF ORG
RESOURCES FOR EXCHANGE (D/FBO FOR M.O.R.E.)
R ef:
HCO PL 28 May 72 BOOM DATA
HCO PL 9 May 82 BOOKS ARE ASSETS
HCO PL 10 May 82 BOOKSTORE OFFICER HAT
HCO PL 20 May 82 BOOK ACCOUNT STOCK REPORT
HCO PL 15 Apr. 82 PLANETARY DISSEMINATION
HCO PL I I Mar. 82 PROPORTIONATE MARKETING
HCO PL 5 Feb. 82 11 BOOKS AND MARKETING
HCO PL 2 Sept. 82 Finance Series 34
AND THAT IS BANKING
HCO PL 3 Sept. 82 Finance Series 35
DEPUTY FBO FOR MARKETING OF ORG
RESOURCES FOR EXCHANGE (D/FBO
FOR M.O.R.E.) PURPOSE
HCO PL 10 Sept. 82 Finance Series 36
EXCHANGE, ORG INCOME
AND STAFF PAY
As covered in HCO PL 9 May 82, BOOKS ARE ASSETS, books, meters,
cassettes, films and insignia are assets of an organization. They are not
merely assets in the sense of their dollar value, but are in fact the gold
and diamonds that give the way to Man's total freedom. Therefore, it is
vital that they not only be safeguarded, but that they be gotten into the
hands of the public to point the way to the road out.
Add to the above the marketing of those assets and the marketing of
Dianetics and Scientology training and processing services and you have a
very broad area of responsibility which has been entrusted to the FBO
Network.
To handle this added responsibility, a new post has been created which
is the Deputy FBO for Marketing of Org Resources for Exchange (D/FBO for
M.O.R.E.). At this writing this post is being filled in each org around the
world with high caliber staff. In their hands lies the potential of
achieving planetary dissemination at a rapid rate. This is no desk job but
requires very dynamic individuals who will work effectively on these high-
powered lines.
547
ORG BOARD
The org D/FBO for M.O.R.E. is located in Department 21, as is the FBO.
He comes under the FBO but also has a direct line with his network seniors
at continental and international levels for the routine operation of his
post, reports and compliances.
At continental and international level, the D/FBO area is its own branch
in the Cont and Int Finance Offices.
In Pubs Orgs an analogous post exists who would have lines to org D/FBOs
for liaison, information exchange and alerts on any situation needing
attention.
DUTIES
The key duties of a D/FBO for M.O.R.E. are
1. Ensuring that at least minimum bookstocks are maintained at all times.
(Ref. LRH ED 5 INT)
2. Being the final authority on the use of and administration of the HCO
Book Account and to ensure the per-policy use of the same.
3. Ensuring that weekly bookstock reports are done and that regular
inventories are done of all stocks.
4. Seeing that book orders are filled immediately-any order not filled
within 24 hours of receipt of the order is simply unthinkable!
5. Seeing that books are not loaned out or given away and seeing that
appropriate ethics action is taken and carried through when this does
occur.
6. Bringing criminal proceedings against those found to have embezzled
HCO Book Account funds or stolen books or other items from the org.
7. Using the points listed in HCO PL 10 May 82, BOOKSTORE OFFICER HAT, as
a daily checklist and to ensure that all points go in and remain in.
8. Ensuring that there is a Bookstore Officer on post and that his
seniors take adequate responsibility for this area of the org. No
executives can be considered bonus eligible until this post is manned by
a competent person who can and does get his duties done per HCO PL 10
May 82, BOOKSTORE OFFICER HAT.
9. Approving the HCO Book Account FP and issuing the checkbooks for check
writing only on the approval of an FP, and then recovering and holding
this checkbook once the FP is activated.
10. Ensuring that Treasury and the Bookstore Officer maintain perfect
records of all HCO Book Account transactions.
11. Getting in, in an org, all the points of HCO PL 20 Nov. 65R, THE
PROMOTIONAL ACTIONS OF AN ORGANIZATION which apply to his sphere of
responsibility.
12. In liaison with the org FBO, ensuring that the FP Committee uses LRH
ED 245R, FINANCIAL PLANNING CHECKLIST FOR THE PROMOTIONAL ACTIONS OF AN
ORGANIZATION, as they apply to his area and get these items POed for,
bought and then used.
13. Seeing that all tapes, films and cine equipment are properly cared
for
548
and calling for ethics action on those being negligent in their
responsibilities.
14. Getting films and tapes in full use in the org.
15. Liaising with the D/Service Product Officer for Books in the org to
ensure maximum book marketing and sales in the local area.
16. Receiving the weekly Book Account Stock Report and using this as an
income sources summary for books to isolate which books in which areas
are selling well and why and to reinforce these actions, including
noting which book campaigns have been successful and resurrecting these.
Then to isolate which books and areas are not doing well per sales and
debugging these.
17. Noting any discrepancies on the Book Account Stock Report and
ensuring the Bookstore Officer locates the reason(s) for such
discrepancies and, failing this, locating the reason(s) himself. Then
getting adequate handlings done so the situation never occurs again! ,
18. Getting FP to cover the costs of any Bookstore items found to be
missing after the weekly stock report is done and when the missing item
cannot be otherwise located.
19. Ensuring that translated books exist in the org for all languages
used in the local area.
20. Monitoring the planning and use of the HCO Book Account funds to
ensure maximum profit, and not blowing the profits on "Two-bit FPs" and
short-range or extravagant planning.
21. Execution of marketing programs authorized for execution on D/FBO
lines.
22. Ensuring compliance to HCO PL 11 Mar. 82, PROPORTIONATE MARKETING.
23. Seeing that the org invests in marketing and promo actions which
result in increased income and body flow into the org (bean theory).
STATISTICS
The post statistics of the org D/FBO for M.O.R.E. are
I . Total retail value of all properly secured and inventoried assets
calculated from the weekly bookstock report. (Covers all Bookstore
items: books, meters, tapes, cassettes, insignia, etc.) This is based
on the weekly stock report done at the end of the previous week. The
D/FBO must actually inspect the state of the stocks and may not count
any items improperly stored which presents a threat to their value
through damage or theft.
2. Gross book sales of the org.
3. Total amount paid out for restocking or for new Bookstore items for
the week.
4. Amount of film lease payments for the week actually paid out, per
film lease agreement.
5. Allocation /production ratio computed as follows: Total amount
actually spent in the previous week (not just set aside) on marketing
and
549
I
promo measured against the total org gross income for the current
week. It reads as a ratio so that the allocation is always I and the
production figure varies according to its relationship to the
allocation. (E.g., allocation amount equals $2,000.00 and GI equals
$20,000.00 so the ratio is 1: 10.)
The weekly condition of the D/FBO is based on the above major stats. In
addition to these the following substats are to be calculated and reported
weekly:
a, Books portion of the GBS.
b. Meters portion of the GBS.
C. Tapes and cassettes portion of the GBS.
d. Insignia and jewelry portion of the GBS.
e. Hat and course packs portion of the GBS.
f Books portion of the restocking stat.
g. Meters portion of the restocking stat.
h. Tapes and cassettes portion of the restocking stat.
i. Insignia and jewelry portion of the restocking stat.
j. Hat and course packs portion of the restocking stat.
Accurately calculating and reporting these statistics will show the
effectiveness of the D/FBO and will enable accurate management of the area
to occur.
The D/FBO in an org is to report his statistics weekly to his
continental senior who then forwards the reports from all the orgs in the
continent to the Int FBO for M.O.R.E.
THEFUTURE
Orgs in the past have tended to remain small or grow slowly because they
did not properly or extensively market their wares.
The primary block on marketing has been org miscomprehensions of finance
as it relates to marketing, promotion and sales. Hence, these functions are
placed in the Finance Network where they can be expertly monitored by
trained and competent personnel with a knowledge of both finance and
marketing.
Today's money wisely invested in marketing an org's wares results in
tomorrow's GI.
Orgs in the past spent their promo monies only on BMO (bulk mail out)-
which is to say, only on the Scn field they already had sold.
To expand, an org must continually reach not only old and on-lines
public but especially new public. It is upon this that future expansion
depends.
Every book, every cassette sold to raw public potentially increases Scn
public to whom, then, even more books, cassettes, AND NOW org minor and
major services can be sold. Every public film properly shown the public
potentially increases org GI. Every Academy film potentially increases MPT
(money paid for training)-IF the public knows of them.
The future GI and size of the org is regulated (given in-tech service
and on-policy
550
admin) by the proper placement of books, cassettes and insignia in public
hands, and the exhibition of films. There is a direct co-relationship
between the marketing of books, cassettes, insignia and films, and the
future GI of the org.
This is why the D/FBO for M.O.R.E. is there. Never before has there been
a network for this purpose.
The formation of this network is a direct push for individual org
expansion, a direct and heavy forward thrust into the population, and upon
it may well depend the future of this planet.
Over to you. D/FBO.
Good luck!
L. RON HUBBARD
Founder
Written at the request of the
BOARD OF DIRECTORS of the CHURCH OF SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:gal.iw.gm Copyright G 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
551
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 2 SEPTEMBER 1982
Remimeo
Finance Series 34
AND THAT IS BANKING
You might be interested to know something about banking and money that
bankers and governments don't know: BASICS!
These are very simple basics. They are also very, very 0 - - - L - - - D
basics.
Money can be said to be a lot of things. It can be said to be an idea
backed by confidence. It can be said to be a system of exchange. It can be
said to be something easier to carry around than a side of beef or a bushel
of wheat. Money can be said to be a lot of other things.
But from the viewpoint of a banker and solid facts, you get the basic
law of banking and the basic definition of banking and money.
MONEY IS A NEGOTIABLE RECEIPT FOR DEPOSITED GOODS.
In order to understand this, you have to understand the original
function and practices of (surprise!) goldsmiths! You see, goldsmiths
simply used gold as a commodity. It went like this:
The goldsmith took in a commodity of one unit of gold. He gave a receipt
to the person who gave him the gold. He did this several times. He then
had, let us say, six receipts-six guys had given him gold to hold and he
gave them each a receipt. These six guys could then use those receipts as
currency since it was gold on deposit with the goldsmith. This is a one-to-
one basis. One receipt given out for one unit of gold taken in.
Now the goldsmith, because he assumed and hoped that all six guys
wouldn't want their gold all at the same time, could then issue additional
receipts against the gold-against the same gold for which he issued the
first six receipts. So he would issue receipts on, let's say a three-to-one
basis-he issued three receipts for every one unit of gold he had on
deposit. These receipts were trusted because people knew he had gold on
deposit.
So you see the goldsmith issued more receipts than he had gold on
deposit. He could then loan out these receipts (currency) that he had
created. People "borrowed money" from him by obtaining one of these
receipts and now they would owe him what they borrowed plus interest. AND
NOW THE GOLDSMITH WAS INTO BANKING. IT WAS THAT STEP THAT PUT HIM INTO
BANKING. You see, there were other things this goldsmith could do. He could
issue receipts and buy property or keep his business running or something.
But the moment he issued and handed out a receipt to people who used that
for currency, why, he was now into banking.
And that is banking.
Now you can do the same thing with commodities. You have a warehouse and
you're into banking. If everybody puts his commodity in the warehouse and
the banker issues a receipt for it, he can now issue on a three-to-one
basis, as the goldsmith did, or twelve-to-one, which is getting pretty
risky but they did that. But, you see, he can do the same thing with
commodities. I don't care if they're shoes or whatever. Now,
552
because he's got shoes (and other things) in the warehouse, he can issue
general receipts against these goods on a basis of one to one, which is
just the depositors, on up to twelve to one.
And he can take those receipts and he can issue them to a manufacturer
who can then buy with those receipts the equipment necessary to set up his
plant. But everything the manufacturer makes is a commodity deposit. The
manufacturer makes something and now he has a commodity deposit. When you
realize that the banker is not taking in all this commodity, you realize it
starts sitting all over the place in all kinds of different warehouses and
so forth. But it is consigned to the bank. It belongs to the bank. It backs
up the receipts. The guy who the banker loans the money to, just out of the
blue sky, doesn't have any commodity there. The banker loaned out money (a
commodity receipt) to a guy without any commodity. Well, that guy has got
to put a commodity there. And this is the basis of banking. If that guy now
doesn't manufacture commodity, the banker is out of luck. In other words,
he doesn't produce the commodity he's loaned money to produce. The banker
now only has the plant.
So now we're off into the banker loaning against the plant. We've
extended it from the deposited goods to what makes the goods.
And that is banking. And that's all there is to banking.
And that's why you see bankers favoring short-term loans. They're not
interested really in a real estate loan. That's a secondary stage. They're
interested in the cars sitting on the lot at Chrysler.
I noticed that when a European automaker recently went to blazes, a
fleet of their cars turned up as being sold to a bank in America, after
that company went defunct. In other words, their manufactured cars became,
just as Chrysler's would become, the property of the bank.
Now what is inflation? INFLATION IS DETERMINED BY THE RATIO BETWEEN THE
DEPOSITED GOODS AND THE NUMBER OF RECEIPTS ISSUED. This present society has
got it up to several thousand to one. In banking, I would never go above
three to one. That is sound banking.
All right. Let's recapitulate. We started by issuing receipts for
deposited goods. Then we extended it to what makes the goods. And we're
going to issue receipts on a safe, intelligent basis-a three-to-one basis,
for example. All right. This is sound banking.
But these current "bank"ers extend it out on whether or not they think
the guy's credit is any good. They extend it out on to whether or not he's
going to issue stocks or shares of his own. (His own issued "receipts.")
And then they're going to keep those as security and, honest to Pete,
you're now up here in froth. That is strictly froth. This whole current
banking system is in froth. Even the American Federal Reserve. They write
down a figure in a little book and tell the US Government that it can now
print that much money. (You may think I'm kidding-I assure you, I'm not.)
To back that money, the Federal Reserve issues Federal Reserve Stock,
called Federal Reserve Bonds and so forth, which is bought by the public.
Just recently, two "issues" have gone out on the same transaction which was
based on nothing to begin with.
In other words, they don't just issue a hundred million dollars in
currency. They issue a hundred million in currency and a hundred million in
bonds. So regardless of their computations, they have not really issued a
hundred million, they have really issued two hundred million, which doubles
instantly the amount of paper in the society on the same transaction.
Result: more inflation.
Hold on, it gets crazier.
Of this transaction, only half of it is covered by interest-only the
bonds. So they feel they're getting only half the interest because the
total issue of paper was two hundred million, and they're only drawing
interest on the bonds, one hundred million. So, "of course" they have to
get twice as much interest on the bonds. And there shoots
553
up the interest rates and now money becomes too expensive to borrow in
order to manufacture something and there goes your new and future
commodities and eventually there goes your society.
And (currently) that is banking (unfortunately).
But don't you be confused. It is really very, very simple. For instance,
if you can get the idea that you would take all of your household goods and
give them to a bank and they would put them in their basement and then they
would give you a receipt for the household goods and then you could give
that receipt to somebody else for some negotiated action-you wanted
something they had or would do for you-why, then you'd understand banking.
And if you can get the idea that that other person that you gave your
receipt to could then go claim those household goods if he chose to, then
you'd understand banking.
And if you can get the idea that that other person might not (probably
wouldn't) go claim those household goods, but instead that he might
transfer the receipt that you gave him (that you got from the bank) to
somebody else for something that he wanted, then you'd understand banking.
And if you can get the idea that even though this other fellow didn't
take your receipt and go claim the household goods, that the receipt does,
in fact, represent that item of household goods that it is for and that
those receipts are backed up by those household goods, why, then you'd
understand banking.
And now we go a bit further and if you can get the idea that we don't
bother to put those household goods in the bank's basement-we leave them in
your home-but that in essence you have sold them to the bank for the
receipt they gave you (and this is what is known as collateral), then you'd
understand banking.
And now we go way upstairs and if you can get the idea that the bank
would print up and issue receipts on a greater than a one-to-one basis
(three to one or six to one, for example), and then loan these receipts to
someone so that he could exchange them for manufacturing equipment, for
example, and produce a commodity and that then these receipts that had been
issued to the manufacturer were now, in fact, backed up by goods, then you
would understand banking, REAL banking. And you would understand that
banking, real banking, can all by itself, increase production. And lo and
behold, THAT WAS THE ORIGINAL PURPOSE OF BANKING!
And that is banking. That's all there is to it. That's the basics.
That's it!
You see, violations of these basics are what got the current bankers and
governments in their present predicaments. Oh sure, they have this plan and
they have that plan. But let me point out to you that they had those plans
last year and the year before that and that their own economic troubles,
budget deficits, etc., last year were not as bad as this year! So maybe
there's something a little wrong with their plans. Well, yes, there is a
lot wrong with their "plans"-their basics are out.
As a banker you can stretch that three to one, like the goldsmith did,
to five to one, or twelve to one. But when you get up to astro-ratios like
these current bankers, boy are you in trouble. You can get a run on a bank.
A run on a bank is when all the guys who hold receipts suddenly believe the
goldsmith is about to blow or leave town so they all go in and ask for
their gold at the same time. Well now, of course, he can't pay it out
because he is not holding that much commodity. So if he had issued receipts
on a twelve-to-one basis, NOW his receipts are worth 1/ 12 (one twelfth)
what they had been worth, just like that.
Anyone who can recall back to the 1930's will tell you . . . "and that
was banking!"
These basics would be known by the Wizards of Wall Street, you would
think, but maybe not. They certainly are not known to London's Parliament.
They might say,
554
"Yes that's interesting, but we do things differently now ... sort of
inapplicable. . . ." Well, I notice that inflation, loss of purchasing
power, economic chaos, etc., isn't being created any differently. They
manage to keep these actions going at a high roar. So maybe these basics
ARE applicable! OH, YES, they are applicable all right-you can bet your
house, car, job and future on them.
All right, we had the goldsmith, then we had the banker who issued
receipts for deposited goods. Now, we've got a new factor-the governments
produce nothing really and yet they print money. What backs it up? NOTHING!
Governments never do produce anything to go into the depository that then
backs up the receipts (currency) and that they then can pay back.
So you wonder why there is inflation? Well, it is just the ratio of the
amount of money against the goods.
I've already told you that there is a limit on the issuing rate in
banking. Anybody that is going for a twelve-to-one ratio (twelve receipts
for one unit of goods) has got his neck stuck out. It is going to cost more
money for a commodity because there is more money around than commodities.
All right, keeping this in mind look at your tax collector. When they
start going up to certain percentages that penalize the company (and
worker) and give it an unmanageable burden, and thereby make it difficult
to service the machinery, make it difficult to introduce new tools and
equipment for a new product, etc., why, the tax man starts putting
businesses out of business. They've been doing that in America and are
nearly finished with the job in England. When a company folds that produces
shoes, let us say, there is then going to be less shoes on the market and
therefore the shoes that remain are going to cost more, again for the same
reason as in the previous paragraph-there is more money around than
commodities.
Ideally, a company should work itself out of debt, not into it. But
because of suppressive, penalizing tax percentages and bank interest rates,
a company works itself into debt so one could say that the tax collector is
in collusion with the banker in these sectors. This brings about inflation
because it is an unproductive 25 or 50 percent of the price of goods. The
government is not furnishing anything to account for that. So this now goes
back into the banking aspect because the company or the individual can
never accumulate enough money to buy new machines, so the banker has to
continuously loan him money to enable him to get his new machinery. But
then that's got interest on it so the tax collector.... You see? The guy
can never get enough money to buy a new plant, he'd never make enough
money. He's either got to get his new plant or his replacement machinery
and so forth, either from the bank or just not do it at all with the tax
collector.
There is another twist to this. What do governments (and sometimes even
banks) do with these tax collections and other pounds of flesh gouged from
the carcasses of people trying to get on with their jobs? They hand them
out as "foreign aid," the dole, welfare and other activities designed to
degrade and subjugate people and kill any initiative and production that
might otherwise occur. And the cold, hard, naked truth is that "downstats"
don't produce deposited goods.
All of that gets added to the price of commodity and that is what
inflation is.
Simple. So simple. It's too simple for these idiots not to be able to
con everybody in the society into believing that it's very complex. But
they don't want the public to understand this because they've got a racket
going and they know it's a racket.
They are a goldsmith with a 2000 to I receipts to goods ratio and it
simply doesn't happen to matter what theory or explanation they dream of.
The facts remain. Period,
And so do the basics remain. And these basics are very, very much for
use by FBOs. FBOs are, after all, banking officers.
I've told you that money is a negotiable receipt for deposited goods.
Well, what about services? Your orgs sell a lot of them. How does a service
fit into this?
555
A SERVICE IS DEFINED AS AN INCREASE OF USABLE GOODS.
Consider a lawnmower repairman who sits down and someone brings him his
broken-down mower and this repairman fixes it. He didn't actually make that
lawnmower, but he did increase the number of usable goods in the society
because before he fixed it there was one less lawnmower and when he was
finished supplying his service there was one more lawninower. And to this
degree, no matter how small it may seem, that lawninower repairman helped
hold down inflation.
In the case of your org, A SERVICE INCREASES THE USABILITY OF A PERSON.
Students and pcs come to you in one state or condition, you supply them
services and they become more useful, more valuable, more productive. This
is not a light statement. The more productive people there are in a
society, the more goods there will be in a society, and the better off
society will be in general.
The goldsmith, as a banker, used his basement as a depository. What is
the FBO's depository?
SERVICE CAPACITY UTILIZED IS THE DEPOSITORY FOR AN FBO.
It is up to an FBO to increase his depository, his utilized service
capacity. And whatever increases his service capacity utilized is the
direction the FBO heads in. A bookstore outlet, another bookstore outlet,
more auditing rooms, more auditors, more pcs to help fill those auditing
rooms, a second HGC, another courseroom, more Supervisors, more students so
the Sups won't be lonely, more Word Clearers, and so on.
The greater the service capacity utilized, the greater the service
delivered.
The greater the service delivered, the greater the income.
The greater the income, the greater opportunity for this banker (FBO) to
loan (invest in FP) for more service capacity.
The greater investment in more service capacity, the greater ability to
get more service capacity utilized.
The greater the service capacity utilized, the greater the service
delivered.
The greater the service delivered, the greater the income....
And on each of these cycles, the FBO and the org get another benefit
from this: products delivered out into society and reserves.
You've got the title of Flag Banking Officer and you've got the tech of
banking. So now let's see you use these basics of REAL banking to do what
they were invented to do and what they DID DO innumerable times over
countless ages-increased production and built empires, yes EMPIRES!
Let it be up to you to apply these basics and then hold up the power
trending stat graphs of your org and your reserves and say, "And THAT is
banking!"
L. RON HUBBARD
Founder
Written at the request of the
BOARD OF DIRECTORS
of the CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
CSI:LRH:dr.gm Church policy by the
Copyright 0 1982
by L. Ron Hubbard CHURCH OF SCIENTOLOGY
ALL RIGHTS RESERVED INTERNATIONAL
556
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 3 SEPTEMBER 1982
Remimeo All Orgs 17130 and D/FBO Hats All Executives and Staff
Finance Series 35
DEPUTY FBO FOR MARKETING OF ORG
RESOURCES FOR EXCHANGE (D/FBO FOR M.O.R.E.)
PURPOSE
(This modifies Finance Series 33 as to the post title of the D/FBO, which
was formerly Deputy FBO for Marketing, Meters, Books, Tapes and Films.)
References.
HCO PL 27 Jul. 82 Finance Series 33
DEPUTY FBOs FOR MARKETING,
METERS, BOOKS, TAPES AND FILMS
HCO PL 28 May 72 BOOM DATA
HCO PL 9 May 82 BOOKS ARE ASSETS
HCO PL 10 May 82 BOOKSTORE OFFICER HAT
HCO PL 20 May 82 BOOK ACCOUNT STOCK REPORT
HCO PL 15 Apr. 82 PLANETARY DISSEMINATION
HCO PL I I Mar. 82 PROPORTIONATE MARKETING
HCO PL 5 Feb. 82 11 BOOKS AND MARKETING
HCO PL 2 Sept. 82 Finance Series 34
AND THAT IS BANKING
(Note: Nothing in this PL relieves management in any echelon or division
from any duties or functions stated in policy and this PL denoting the
purpose of the D/FBO for MORE may not be used to offload hats of promotion
or sales on the D/FBO network. Its authority is to see that such hats are
worn fully by org posted terminals and only in their neglect or absence to
bypass.)
Why are marketing, books, tapes, cassettes, films, insignia, meters and
related items in the FBO network?
Well, to begin with, such items are assets. And like any asset, any or
all of these items are valuable and can be stolen, abused, misused, ripped
off or result in loss.
Like money, these items can be the subject of exchange and in times when
money is less valuable these assets might even be more valuable.
Any of these items are cared for by, or subject to, accounting
procedures. They have to be counted and safeguarded just like money. The
real basis of all money is goods, and goods are more basic than money for
money is simply a substitute for goods or services.
In the past these items have been subject to very wide abuses which have
affected
557
the health and prosperity of orgs. In earlier times orgs could obtain such
items from the Publications Department, sell them and instead of ordering
new items, put the money made into the org accounts and spend it for staff
pay and so forth. In this way Central Publications activities were
subsidizing orgs. This was so bad that orgs actually thought they would go
insolvent if they could not illegally misappropriate money for these items
for their own use.
This was what began the HCO Book Account. Unless the Book Account is
used to replenish stocks, an org will shortly run out of stock and have
nothing to sell. This effectively cuts its reach to the public and reduces
demand on the org for service GI. A not-so-nice word for the practice of
using book money for running expenses is embezzlement. Thus one has to have
a broad and trustworthy network to safeguard against such practices,
But there is an even more fundamental reason why these items are
entrusted to and generally overseen by the FBO network.
This has to do with a general principle which is glaring in its omission
on this planet. It has to do with the fundamentals of prosperity.
Governments, the tax man, bankers and even accountants on Earth (and in
most space civilizations as well) operate on the principle that they are
there to take money from activities for their own use. It is to be noted
that robbers have the same idea. Such entities operate on the basis that
their sole activity should be devoted to taking money. This is why you get
down economies, why empires go broke, why inflation occurs and innumerable
other evils. Such misguided people have a fault in their arithmetic. They
think they can take something from nothing and that, let us say, 10% of
nothing is something.
There is a different principle which can be applied and this is the
principle of making an individual or area so prosperous that the money
spills over into your lap. One can, by operating on the third and first
dynamic, achieve in abundance any ambition on the first dynamic to have
lots of money. All one has to do is to make sure that what he is taking the
money from is so prosperous, so well run economically and so financially
sound that even a river of money taken from it does not affect its overall
prosperity. Now this is real money management.
When I am talking about this second principle I am not talking about
economic pie-in-the-sky or Marx or Keynesian crackpot theories like they
are. I am talking from a long background of solid economic application
which has worked and worked and worked. I could actually point out, just in
Dianetics and Scientology management, areas where I have done this
repeatedly and successfully. It was at those times that International
Reserves swelled. In fact most of the money in Int Reserves was made in
exactly this way.
This began a long time ago but we won't go into that. The genus of it is
that I like to see people prosperous. I mean them well. This is, by the
way, unique. The head of the Federal Reserve-judging by his financial
"practices" -does not have this attitude. He probably rubs his hands and
chortles all night at the thought of people in rags. And I am sure that an
IRS man is never happier than when he has just got through bankrupting a
business. Money is a form of power and power is all too often used to
crush, suppress and get even with the world.
If one is very clever and knows his business, he can actually force into
existence unbelievable levels of prosperity for one and all.
Now you won't easily believe this but this second principle is one of
the hardest principles to get across in all the lexicons of expertise. One
is going up against, as one tries to get this operating, first dynamic
fixations. Trying to get people to see that they will continue to make
pennies if they persist in trying to rip things off whereas they themselves
could make big money if they worked to make their collection points
prosperous as their main area of concentration, appears to be very
difficult. The people one is trying to convince and get cooperation from
have too many examples around them of shortsighted arithmetic. Additionally
most of their literature concerns itself
558
with people getting rich by ripping others off. In fact it is apparently
deeply engrained in people that there is no other way of life.
But I have an answer to this: one does not closely consult or expect
much cooperation from people in applying the second principle above; one
simply does it on a bypass. You see this expressed in such a line as,
"Drive more business down on an org than it can waste" and that is almost
the guiding principle of the Deputy FBO for MORE.
So you could draw a little diagram of flows. Here's the FBO attempting
to make collections so that the cost of management can be defrayed. Put him
on your little diagram over to the upper left. Now put a circle in the
middle. This is the org or the service center or the bulk of the
civilization. Now put a very thin line from that center circle up to the
FBO, now label this line with a money symbol. Now over to the right of that
center circle put some very thin arrows pointing at the center circle with
zeros on them.
In this first diagram you have outlined a very difficult situation.
There is little if any money flowing into the center circle so the money
the FBO can get out of that is very close to zilch. This, believe it or
not, is the normal pattern in practice in tax offices, banks and etc.
Obviously this makes economics and finance very, very, very, very, very
difficult.
Now let's draw a second diagram. Let's put the FBO up in the upper left
hand corner, let's put the circle in the middle and now let's put a D/FBO
up in the upper right hand corner. Now down from the D/FBO draw a number of
lines which curve out to the right and then point back to the center
circle. Put a money symbol on each one of these lines. This symbolizes the
D/FBO driving public money in on the org. Now let's draw a very fat line
from the center circle up to the FBO and put a very fat money symbol on it.
You have there in the second diagram the major purpose of the D/FBO.
To understand this one has to understand what marketing does, what books
can do, the role of insignia, the actual effect of tapes and cassettes and
even meters in full use in public hands. The publics involved are raw
public (divided into many categories) and Scientology public (again divided
into many categories). If each one of these publics were interestedly
active, the amount of bleed-off from that activity into the org would be
stupendous. The org and all of its staff would become prosperous and the
percentages of money taken by the FBO would hardly be missed. And the money
taken by the FBO, used in part to create more central marketing activities
and to make it profitable to manage the org from afar, feeds back into the
cycle of public monies into the org.
In other words you get a little machine going here. Regardless of where
the org is, if it had an efficient FBO keeping it financially honest and on
the rails with finance policy and a D/FBO, with or without a checkered coat
and megaphone, using every tool to drive business in on the org, you would
get a little whirlwind going which would get bigger and bigger and bigger
and bigger and bigger.
An org is essentially a service unit and unless it delivers what is
being sold and delivers it well, it will soon get into trouble; but the
form of that org and its degree of activity is the basic concern of overall
management. When the org does not deliver or delivers badly, it gets into
refunds and flies back into the teeth of the FBO network. Thus it is of
enormous interest to the FBO network, of course, that the org is well
managed both on long distance lines and internal lines and there are many
networks and management lines and terminals to ensure this.
But what has been the existing state of affairs? In the past orgs have
neglected the various publics even to the point of not marketing Book One,
the source of all subsequent public demand. Even as I write this, a datum
is to hand that right this minute when the Pubs Organization sends out
promo to orgs a number of them simply take it off the express and put it
into a closet. I can assure you that that closet is not going to buy any
training or processing. The amount of income lost is really income not
559
made. The potential of income generated by promotion, if not realized, is
actually a loss. Poor promotion angled for the wrong publics, promotion
material not used or simply no promotion at all is about the most expensive
loss now being experienced. It is, at minimum, in terms of millions a week.
But you must realize that promo itself is an asset. It costs money. It has
to be well used and it should not be wasted.
Films shown incorrectly or not shown at all are a loss of not made
income. The public, not knowing they exist or that if they sign up for
training they will see films not otherwise available, does not sign up.
People who have read Dianetics and Scientology books, as any Registrar
will tell you, are very easy to sign up. People who have not are very
difficult to sign up.
On the subject of insignia, if the image and symbols of Dianetics and
Scientology are not seen around it remains to that degree, unknown.
Tape plays in the org and cassette sales outside the org make the public
aware of the product and when these are dropped out the whole purpose of
Dianetics and Scientology tends to become lost.
If field auditors are not auditing, buying updated packs and using good
meters, the field is not only relatively inactive, one gets a poor word of
mouth in the field which makes it difficult to push business down on the
org.
The tools of the Deputy FBO are any of those connected with marketing,
promotion, PR, advertising, merchandising, and are actually pretty standard
tools. We have a lot of advanced tech on this subject and all of it is of
interest and it needs to be applied at org level. But, historically, unless
there is somebody there making sure that these tools are used, it hasn't
happened. The D/FBO network is the first time ever that there has been an
international control of marketing, promotion, advertising, PR. etc.
Thus we see that the D/FBO is safeguarding assets and making sure they
are not neglected or abused and getting those assets into full use so that
the resultant exchange with the public and the org brings about a
prosperity which makes the functions of the FBO much easier and, indeed,
even possible.
We have in Dianetics and Scientology a highly desirable product which is
unique and effective. The public demand for it is proportionate only to the
degree that it is made known and made available. It quite honestly works.
And if properly delivered results in rave individual results. That of
course is a statement of minimum scope concerning these subjects: They go
far beyond that.
Historically, if you care to look on the 32-year backtrack, I have had
to wear the hat of applying that second principle described above. I have
also had the hat of "driving more business down on the orgs than they could
waste."
It is a great relief to have somebody else wearing this hat.
Wear it well.
L. RON HUBBARD
Founder
Written at the request of the
BOARD OF DIRECTORS of the CHURCH OF
SCIENTOLOGY INTERNATIONAL
Adopted as official
CSI:LRH:iw.gm Church policy by the
Copyright 0 1982
by L. Ron Hubbard CHURCH OF SCIENTOLOGY
ALL RIGHTS RESERVED INTERNATIONAL
560
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 10 SEPTEMBER 1982
Remimeo
All Staff
Finance Series 36
EXCHANGE, ORG INCOME AND STAFF PAY
Sometimes the question of staff pay arises although, by survey, the
condition with most staffs reportedly is secondary to org income and
getting a show on the road.
So it is of interest what really underlies org income and staff pay.
There is a term used in business called "fair exchange."
Let us apply this to an activity engaged in servicing the public.
We can isolate four conditions of exchange.
1. First consider a group which takes in money but does not deliver
anything in exchange. This is called rip-off. It is the "exchange"
condition of robbers, tax men, governments and other criminal elements.
2. Second is the condition of partial exchange. The group takes in
orders or money for goods and then delivers part of it or a corrupted
version of what was ordered. This is called short-changing or "running into
debt" in that more and more is owed, in service or goods by the group.
3. The third condition is the exchange known, legally and in business
practice, as 'Tair exchange." One takes in orders and money and delivers
exactly what has been ordered. Most successful businesses and activities
work on the basis of "fair exchange."
4. The fourth condition of exchange is not common but could be called
exchange in abundance. Here one does not give two for one or free service
but gives something more valuable than money was received for. Example: The
group has diamonds for sale; an average diamond is ordered; the group
delivers a blue-white diamond above average. Also it delivers it promptly
and with courtesy.
Now, believe it or not, org income and staff pay depend upon which of
the above four exchanges is in practice by (a) the org or group; or (b) the
staff member in the group.
If exchange number 1 is in vogue, income will dry up with a thoroughness
you wouldn't believe. Although the TV and movies try to tell one that
robbery is the only way to get rich, this is not true. Those who engage
upon it, whether they be stickup men, corporate con men or governments, are
not long for this world. The bigger the group, the longer it takes for it
to fall, but fall it assuredly does. And the individual who takes but does
not give ends up with a deep-six in many ways quite rapidly.
The second condition of partial exchange can only keep a group or
individual going just so long. The end result is painfully a demise of
status or position and, most certainly, income. Many "third world
countries" and even the bigger ones are in this plight right now. They take
in but do not really produce or give. This is what inflation is all about.
Unemployment ranks are full of such.
561
The third condition of "fair exchange" gives one a rather level
progress. It is considered "honest," is socially acceptable and very legal
under law. It does not, however, guarantee any expansion or improvement of
a group or the lot of a person. It is barely comfortable.
The fourth condition is the preferred one. It is the one I try to
operate on and have attempted to for ages. Produce in abundance and try to
give better than expected quality. Deliver and get paid for it, for sure,
but deliver better than was ordered and more. Always try to write a better
story than was expected; always try to deliver a better job than was
ordered. Always try to produce-and deliver-a better result than what was
hoped for.
This fourth principle above is almost unknown in business or the arts.
Yet it is the key to howling success and expansion.
It is true for the org, it is true for the individual staff member.
Where a group is concerned, there is another factor which determines
which of the four above is in practice. It is group internal pressure.
Where this only comes from executives, it may not get activated. Where it
comes from individual group members in the group itself, it becomes
assured. The internal demand of one staff member to another is what really
determines the condition of the group and establishes which of the four
conditions above come into play.
Thus the org collectively, in electing which of the four principles
above it is following, establishes its own level of income and longevity
and determines its own state of contraction or expansion.
While this is a must in an executive-to establish the principle being
followedthe real manifestation only occurs from pressure by individual
staff members or others within the group.
Unions and workers in the auto industry elected to follow exchange
number 2 above. This brought about the decline you see in auto companies.
Had they elected to follow number 3 they would not be in trouble. Had they
elected to follow number 4 they would now be in clover for the world today
does not really have a truly good, economical, wreck-free car.
It is up to the individual staff member in a group what the group income
is and what their own staff pay is. The org cannot earn more and the
individual staff member cannot be paid more than will be established by
which principle above they elect to follow.
If they follow number 3 they will get along. But if they follow number 4
they will really flourish and prosper. And it is the only one which
guarantees expansion.
L. RON HUBBARD
Founder
Written at the request of the
BOARD OF DIRECTORS
of the CHURCH OF SCIENTOLOGY
INTERNATIONAL
Adopted as official
CSI:LRH:iw.gm Church policy by the
Copyright @ 1982
by L. Ron Hubbard CHURCH OF SCIENTOLOGY
ALL RIGHTS RESERVED INTERNATIONAL
562
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 4 SEPTEMBER 1971RA
Remimeo REVISED AND REISSUED 27 OCTOBER 1982
All FP and
Finance Packs CANCELS
FBO Hats HCO PL OF 4 SEPTEMBER 1971
Finance Enforcement
Officer Hats AND
D/FBO Hats BPL 4 SEPTEMBER 1971R
All Staff ISSUED 16 AUG. 1975
BOTH OF THE SAME TITLE
(Issued originally as an HCO PL by a former
Finance Aide and then converted to a BPL, this
valid policy has become lost and is therefore being
reissued as revised at the request of the Church of
Scientology International.)
Finance Series 37
FP AND NECESSITIES
(THE FBO APPEAL LINE)
A "NECESSITY" is what it takes to make products and valuable final
products. (Ref. HCO PL 13 Feb. 71R, FINANCIAL PLANNING TIPS, Finance Series
2R.)
A divisional secretary is responsible for seeing that the necessities of
his division are provided for in financial planning. This responsibility
extends to follow-up of approved items to ensure that they are purchased by
Division 3 and delivered in good order.
For the Treasury Secretary this duty extends to the necessities of the
entire org.
DENIED NECESSITIES
Too often, FP troubles trace on investigation to one or more of the
following:
1. The item in question was never proposed to any FP Committee.
2. The item was returned for better CSW and never reappeared.
3. The item was refused by an FP body but never appealed-either to the
FP body or the FBO.
4. The FBO saw the item safely through FP months ago but it was never
bought or the money was otherwise (without authorization) used.
In order that the FBO can ensure that existing policies on the above are
followed, an appeal line is hereby established.
The appeal line is direct to the FBO. Any staff member may use it.
It concerns the use of the org's allocation-not the amount.
It is used whenever a vital necessity is denied in FP.
It is used when an FP-approved item is stalled on purchasing lines.
It may be used in any case where usual lines have failed to remedy a
nonoptimurn situation concerning the approval or purchase of necessities.
563
Any staff member may appeal to the Cont FBO or even the FBO Int if not
handled to the satisfaction of the staff member at org level but in such
cases must include the result of the appeal to the org FBO.
Any report of such situations received at Cont or Int level without
first having been appealed to the org FBO shall be considered incomplete
and will be returned without further handling.
Where the appeal concerns delayed implementation of a Flag or higher
level issue or order, a copy of the appeal must be sent direct to the Flag
Rep at the FOLO and to the Org Pgms Chief at FOLO as well as to the Int
Finance Ethics Officer located at Flag.
FBO ACTION
The usual FBO action would be
I To get the situation HANDLED terminatedly and reported to the Cont
FBO at once with info copies of the report sent to FOLO and Flag Data
Files for that org.
2. To get the related policy letters or other issues checked out on all
concerned.
3. To require of the Dir I&R an investigation of the matter to determine
the source of the situation and any out-ethics found handled; and
failing that, the FBO, or Finance Enforcement Officer where posted, must
personally investigate the matter and handle TERMINATEDLY. The results
of any such investigation must be reported to the Int Finance Ethics
Officer with copies to Flag and FOLO Pgms Chiefs.
REASON
One of the FBO's statistics is the A LLOCATION- PRODUCTION ratio of the
org.
If his allocation buys VFPs, he can expect a rising allocation-
production ratio statistic. Normally, this is assured by the use of an
allocation system which allocates against VFPs.
However, if the org and divisional necessities are denied or neglected
outside his view, he may find allocation-production crashed weeks or months
later.
Also, too often FP and Finance are given a bad name in connection with
situations actually tracing to 1, 2, 3 or 4 above.
Finally, this policy letter gives staff members a line of recourse and
final appeal in the event that it is needed to ensure the continued and
high volume production of valuable final products of their divisions and
the org.
No staff member may be made the subject of an ethics or justice action
for making an appeal which conforms with this policy letter. However, not
making an appeal when it results in lessened production in an org would
result in ethics or justice actions being taken against the staff member.
L. RON HUBBARD
Founder
Revision written at the request of the
CHURCH OF SCIENTOLOGY INTERNATIONAL
CSI:LRH:dr.gm Adopted as official
Copyright 0 1971, 1982 Church policy by the
by L. Ron Hubbard CHURCH OF SCIENTOLOGY
ALL RIGHTS RESERVED INTERNATIONAL
564
HUBBARD COMMUNICATIONS OFFI
Saint Hill Manor, East Grinstead, Susse
HCO POLICY LETTER OF 27 OCTOBER
REVISED 16 SEPTEMBER 1983
Remimeo
FBO Hats (Revisions in this type style)
Finance Enforcement
Officer Hats
Treasury Hats
Exec Council Hats
Orgs, Missions, Finance Series 38R
SoCo, WISE, SMI,
Pubs (Revised to clarify the definition of "bills")
CASH/BILLS DEFINED
(THIS HCO PL MODIFIES ANY OTHER EARLIER ISSUE WHICH MAY SEEM TO CONFLICT
WITH IT.)
Cancels:
BPL i July 72R CASH/BILLS AND ORG RESERVES
References:
HCO PL 30 Sept. 65 STATISTICS FOR DIVISIONS
HCO PL 18 Jan. 65 FINANCIAL MANAGEMENT -
BUILDING FUND ACCOUNT
HCO PL 28 Jan. 65 HOW TO MAINTAIN CREDIT STANDING
AND SOLVENCY
HCO PL 3 June 59 FINANCIAL MANAGEMENT
HCO PL 31 Oct. 82 FINANCIAL PLANNING -
RESPONSIBILITY FOR
(Revision of bills stat to be reported on the org O/C cable with first
report for WIE 13 October 1983. Revised stat report takes the place of old
stat on cable.)
The subject of the cash/bills statistic and how it is managed has been
loaded with false data for years. It was even incorrectly assigned by
others to the Treasury Division of the org as its GDS. The cash/bills
statistic is the statistical indicator of org solvency. The solvency of an
org has always been the responsibility of the org Executive Council.
Cash/bills is correctly an org statistic that is an Exec Council statistic
regardless of other statistics the individuals who are members of the Exec
Council may have.
SOLVENCY
The basic principle of financial management is a simple one:
INCOME MUST BE GREATER THAN OUTGO.
Other principles of financial management include: One cannot spend money
unless he has it. Never contract bills or debts unless the money is
immediately in sight to pay for them. Calculate all predictions necessary
for financial security. Disseminate like mad and make money rapidly.
So what is solvency9 Solvency is only that condition where income
exceeds outgo. Insolvency is only that condition where outgo exceeds
income.
CASH/BILLS STATISTIC
If one understands the simplicity of what solvency is, then the
definition of the cash/bills statistic becomes immediately evident when one
considers that this statistic is intended to measure the degree of solvency
or insolvency which exists in the organization.
565
CASH
The term "CASH," for the purpose of the cash/bills statistic, is
actually "CASH ON HAND." It is the gross cash figure which the org has in
its accounts reconciled as of 2:00 P.m. Thursday. It does not include cash
in the FBO accounts nor does it include the current week's income, as the
current week's income will be with the FBO in his accounts. The amount
which will be going into org accounts is determined by the allocation given
by the FBO after 2:00 P.m. Thursday. Cash in the HCO Book Account is also
not included as the HCO Book Account has its own cash/bills graph.
The "CASH" figure includes the total reconciled balances in the Org Main
Account and Org Reserves Account. Accounts such as the Service Completion
Award Account, FSM Instant Payment Account and CVB Account are not included
on the "CASH" figure as these are funds already considered committed even
though in the case of the CVB Account it is intended that the money be
salvaged. When a potential refund is salvaged, the funds are added into the
org CGI in the week salvaged and so will raise the "CASH" figure and thus
the staff payroll amount. (You will also have saved a being.) The "CASH"
figure also does not include what had sometimes been known as "GO reserves"
or the "GO Defense Fund." (These funds were actually set up by a former DGF
WW in an attempt to put under GO control funds from orgs that should have
gone to SOR for the good of all.)
BILLS
The "BILLS" stat is actually "BILLS OWINW' It is defined as the total
debt of the org, not including billings from management for management
services (e.g. evals, programs, missions to the org and other management
services which are paid for by the FBO from amounts over and above the
allocation given to the org for its financial planning). It does include
billings for staff training received on credit at higher orgs and
promotional materials received from other orgs, as these are routine FP
items and are paid from the allocation given by the FBO for use in FP.
The bills stat is computed based on the total accumulation of all monies
owed by the org, except management billings as above, whether due in PT for
payment or not. Thus one can see that regardless of whether a bill has been
received or not, if the org is in any way committed to pay out funds it
would have to be included.
It is the FBO of the org that takes care of the payment of management
billings, and these are included in his statistic of payments to central
reserves. Just as the payment of these management billings is not included
on the org~R bills paid statistic, the bills themselves are not included in
the bills statistic.
REPORTING
The cash/bills statistic is reported each week on the org OIC cable.
The figures reported are to be the totals as of 2:00 P.m. Thursday of
the previous week, as it would delay the sending of the OIC cable to get
done the necessary bank account reconciliations and bills calculations for
the current week.
(Note: This procedure of reporting the cash/bills totals of the previous
week is a temporary measure until such time as Treasury Divisions are
sufficiently manned and functioning, and at that time this PL will be
modified so that the org's cash/bills statistic as reported on Thursday
will be the cash/bills figures as of that same Thursday. In the meantime,
however, the cash/bills figure that goes on Thursday's OIC cable report is
last week's reconciled org cash and last week's org bills owing.)
566
TREASURY DIVISION
The correct GDSes for the Treasury Division are as contained in HCO PL
30 September 1965, STATISTICS FOR DIVISIONS, OEC Vol 1, page 328. The
statistic is dual: CREDIT COLLECTIONS VERSUS BILLS PAID. As covered in that
PL "It will be seen that gross income is established by many in the org but
collections as a special income is purely the Org Division's.1 Bills paid
require gross money in, so reflects the gross-no money in, no bills paid.
This is a dual statistic which shows the industry of the division in
general. It even touches materiel as no bills paid equals no supplies."
These were the Treasury Division stats of old Saint Hill and are as
valid now as they were then. When somebody made cash/bills the Treasury
Division GDS, this gave Div Ills the same stat as that of the GO in 1966
when the GO had a finance function. It resulted in org Div Ills "being run"
directly by the GO on a bypass of org executives. The end result of that
has been a solvency situation still being untangled in some orgs as the
cash/bills stat has been continually manipulated by trying to save orgs
into solvency which has actually resulted in "saving" some into insolvency.
FINANCIAL MANAGEMENT
Any org executive or finance terminal who knew his basics cold and
applied them would have no trouble making an org solvent and prosperous.
The stable datums in handling org solvency are contained in HCO PLs
going back to the 1950s. They are all in OEC Volume 3. The most basic
stable datums are contained in HCO PL 28 January 1965, HOW TO MAINTAIN
CREDIT STANDING AND SOLVENCY:
"The secret of solvency is
1 Make a lot of money. The way to do that in Scientology is covered in
HCO
Policy Letter of January 21, 1965, PROMOTION AND ORGANIZA
TION .2
2. Spend less than you make. That's covered by having a good PO
system and alert financial management.
3. Make it before you have to spend it.
4. Gather bit by bit a cushion of cash to fall back on and don't
ever fall back on it.
5. Keep your credit excellent as a second cushion.
6. Refuse to spend reserves. Make more money to meet the emergency
instead. (It's usually quicker to make it than to dig it out of old
hiding places. Never borrow to pay bills. It's less trouble just to
make the money.)
7. Realize that collective thought regarding finance is just bank
and that bank is dead against the creation of anything good and all
for eating up everything that exists. Thus financial planning and
control is an individual job, is often contrary to group demands and
succeeds only when the individual handling it can rise superior to
the group. A tame dog financial manager, trailing along behind the
group, yessing everything, will always make the group insolvent. The
person you put in charge of financial management should be able to
say 'No!' no matter how popular a silly 'Yes' would be. The
financial manager is not there to buy his own popularity with org
funds."
SUMMARY
The cash/bills statistic measures org solvency. Therefore its
calculation must show the ACTUAL state of solvency. Others in the past
sought to manipulate it to show an 44up statistic" for their own false
status.
Correctly assigning cash/bills as an org statistic to the org's
Executive Council shows the degree of competence of those executives and
giving the Treasury Division their correct GDSes puts them at cause over
the statistics they actually control and can be managed by.
567
With these statistics correctly assigned and properly managed, the
financial prosperity of orgs is assured.
Good luck!
L. RON HUBBARD
Founder
Written at the request of the CHURCH OF SCIENTOLOGY INTERNATIONAL
Original compilation and revision Assisted by WDC for Reserves
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:WDCR:iw.gm Copyright 01982, 1983 by L. Ron Hubbard ALL RIGHTS
RESERVED
1. Org Division is an earlier name for the Treasury Division.
2. HCO Policy Letter 21 January 1965, PROMOTION AND ORGANIZATION, was
revised 5 April 1965 and titled VITAL DATA ON PROMOTION and can be found
in OEC Volume 2.
568
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 31 OCTOBER 198
Rernimeo
Executive
Council Hats
Ad Council Hats
FBO Hats
Treasury Hats (This policy letter modifies any previous issue which
Dept Heads states or infers that the financial planning for an org
is solely the responsibility of the Advisory Council.
The major responsibility for financial planning lies
with the Executive Council as it is the governing
body responsible for the org's solvency.)
Finance Series 39
FINANCIAL PLANNING - RESPONSIBILITY FOR
(R ef.
HCO PL 26 Nov. 65R FINANCIAL PLANNING
Rewritten 31 Oct. 82
HCO PL 21 Dec. 66 1 ADVISORY COUNCIL
HCO PL 21 Dec. 66 11 EXECUTIVE COUNCIL
HCO PL 26 Oct. 68 EXECUTIVE COUNCIL
HCO PI, 29 Jan. 71R Finance Series IR
Rev. 27.10.82 FLAG BANKING OFFICERS
HCO PL 3 Sept. 82 Finance Series 35
DEPUTY FBO FOR MARKETING OF
ORG RESOURCES FOR EXCHANGE
(D/FBO FOR M.0.R.E.) - PURPOSE
HCO PL 27 Oct. 82 Finance Series 38
CASH/BILLS DEFINED)
Financial planning means handling the assets of an org and allocating
its funds in such a manner as to achieve income greater than outgo.
The basic purpose of all financial planning is to increase the wealth
and assets of the organization in order to help achieve its goals and
purposes and its expansion.
Financial planning was originally the responsibility of the Advisory
Council which, in 1965, was composed of the HCO Exec Sec and the Org Exec
Sec and was understood to include the org's Executive Director. As a result
of an evolution in org pattern the Executive Council was formed and the
Advisory Council was then made up of the divisional secretaries and any
duly elected representatives from other units or areas. (Ref. HCO PLs 21
Dec. 66, Issue 1, ADVISORY COUNCIL and Issue 11, EXECUTIVE COUNCIL.)
Despite these policies, which clearly state financial planning is a
primary duty of Executive Council, with the role of the Advisory Council
being to originate, advise and recommend to Executive Council measures for
approval, confusion seems to have persisted in some areas as to who
actually wears the financial planning hat.
569
To set the matter straight, the correct datum is
THE EXECUTIVE COUNCIL IS RESPONSIBLE FOR FINANCIAL PLANNING AND ACTS ON
THE ADVICES OF THE AD COUNCIL (AND IT, THE AD COUNCIL, IN TURN GETS
ADVISED BY THE HEADS OF DEPARTMENTS).
By Executive Council is meant: The council composed of the senior
executives of the org-the ED or CO, the HCO Exec Sec, the Org Exec Sec and
the Public Exec Sec.
By Advisory Council is meant: The council composed primarily of the
heads of the divisions of the org-the divisional secretaries.
(Where a complete Org Officer system exists in an org, the financial
planning can be delegated to the Org Officers to do but still requires Exec
Council approval before going to the FBO.
Ref. HCO PL 9 May 74, PROD-ORG, ESTO AND OLDER SYSTEMS RECONCILED and
HCO PL 7 Mar. 72, Rev. 13 Apr. 72, Esto Series IR, THE ESTABLISHMENT
OFFICER.)
In practice, the department heads of a division would see that any
necessary purchase orders from their departments were sent to the div head,
along with full CSW and advices as to the department's needs.
The Advisory Council meets and, taking into consideration the advices
from the department heads, does its proposed income planning and financial
planning for the week and submits its recommendations to the Executive
Council.
The Executive Council, with the solvency and expansion of the org in
mind, reviews the proposed income planning and financial planning. It acts
on the Ad Council's proposals and acts as well on any recommendations from
the FBO or the Deputy FBO for M.0.R.E. (Ref. HCO PL 3 Sept. 82, Finance
Series 35, DEPUTY FBO FOR MARKETING OF ORG RESOURCES FOR EXCHANGE [D/FBO
FOR M.0.R.E.1 PURPOSE.) It operates on the Bean Theory. (Ref. HCO PL 19
Mar. 71RA, Issue 11, Finance Series 7RA, BEAN THEORY-FINANCE AS A
COMMODITY.) It sees that plans are made for effective promotion and
delivery of the org's goods and services and that the org's funds are
wisely allocated so that the org makes far, far more money than it spends.
On this basis it may add to, subtract from, amend or approve the proposed
financial planning, or return it to the Advisory Council for correction or
revision.
Once approved by the Executive Council, the financial planning, along
with the projected income plan, Accounts Summary, Bills Summary and Income
Note Collections Summary, is sent to the FBO. The FBO is the final approval
authority for the org's FP. He would review the FP himself and have the
D/FBO for M.0.R.E. check any portions of the FP that concern the hat of the
D/FBO for M.0.R.E. The FBO and D/FBO for M.0.R.E. look at FP from the
viewpoint of whether the funds proposed to be spent will result in more
production and more funds back into the org than are being spent. The FBO
is not there to do the org's financial planning himself. He ensures that
the Exec Council wears that hat and verifies that it is being done
correctly to buy more income and production. When satisfied that all is in
order, the FBO gives the org its allocation.
The line goes from the department heads to the Advisory Council to the
Executive Council to the FBO.
Although the FBO is the final approval terminal for the allocation
before the FP can be activated, the Executive Council is fully responsible
for financial planning for the org. This includes long-range financial
planning as well as the weekly FP. In the final analysis, the financial
health of the org is in the hands of the Executive Council. This is why the
statistic of the Executive Council is org cash/bills, as it is the
statistic
570
which reflects the competence of the Exec Council to manage the finances of
the org and bring about a very solvent and prosperous org. If cash/bills is
improving by trend, you know that the Exec Council is wearing its financial
planning hat correctly.
Where an Executive Council or any member of it is not wearing this hat,
responsibility for the org as a whole is missing and it will show in a
declining cash/bills spread by trend.
With sound financial management, an active, on-policy, on-hat Executive
Council can build a viable, expanding and prosperous org.
L.RON HUBBARD
Founder
Written at the request of the BOARD OF DIRECTORS of the CHURCH OF
SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:pm.iw.gm Copyright 0 1982 by L. Ron Hubbard ALL RIGHTS RESERVED
571
HUBBARD COMMUNICATIONS OFFICE
Saint Hill Manor, East Grinstead, Sussex
HCO POLICY LETTER OF 26 NOVEMBER 1965R
Rernimeo REWRITTEN 31 OCTOBER 1982
Executive
Council Hats
Ad Council Hats
FBO Hats
Treasury Hats
(In 1965, when this policy letter was originally written, it
was the Advisory Council's hat to do financial planning.
At that time the Advisory Council consisted of the
senior executives of the org. Later, with the introduction
of the seven div org board, what was the Advisory
Council became the Exec Council and the Div Heads
Council took on the name of Advisory Council. With
the introduction of this change, some staff mistakenly
thought that the final org responsibility for financial
planning became the territory of the div heads which
would, of course, be impossible as it is the Exec Council
who are held responsible for the solvency of the org as is
clearly expressed in HCO PL 21 Dec. 1966, Issue 11,
EXECUTIVE COUNCIL. The real datum is that the
Exec Council is responsible for financial planning and
acts on the advices of the Ad Council and in turn the Ad
Council gets advised by the heads of departments.
Therefore, this HCO PL has been updated to reflect the
changes which have occurred since the original issue,
including the role of the FBO in relation to financial
planning.)
(Revisions are not in script.)
Finance Series 40
FINANCIAL PLANNING
(References:
HCO PL 31 Oct. 82 FINANCIAL PLANNING -
RESPONSIBILITY FOR
HCO PL 21 Dec. 66 EXECUTIVE COUNCIL
Issue II
The Finance Series Policy Letters.)
Financial planning means: how to handle the money and assets of an org
so as to maintain outgo below income.
The financial planning hat, in the final analysis, is worn by the
Executive Council, as theirs is the responsibility for the successful
conduct of the org as a whole.
In this, it is assisted by the Advisory Council, whose responsibility is
to assist the Executive Council in planning for the solvency of the org and
to propose to the Exec Council sane and prosurvival handlings for its
income and assets. The Ad Council, in turn, is advised by the heads of the
departments.
Once the Exec Council has reviewed and approved the financial planning,
it is then forwarded to the FBO for approval of the allocation. Final
authority for the
572
allocation is the hat of the FBO and he may approve it as proposed, lower
it or raise it in accordance with the policies issued in the Finance Series
to ensure that his allocation will result in increased income and
production. In exercising this authority the FBO may override the proposal
of the Exec Council and his decision is final. Where an Exec Council is
seen to be properly wearing its financial planning hat and is getting the
required income and production expected from the org, the FBO would simply
verify this for himself and verify that the allocation requested is correct
and then transfer to the org the approved allocation.
The actions of financial planning are as follows:
1. Income planning. This is planning which forces in marketing,
promotion, sales and delivery which will result in income.
It is the first step in the sequence as income must be made before it
can be spent.
2. Ensuring that Financial Planning Program No. I is done for the org
and maintained. (Ref. HCO PL 28 October 1982, FINANCIAL PLANNING PROGRAM
NO. 1.)
3. Directing the outlay of funds necessary to execute its planning, in
alignment with HCO PL 19 Mar. 71R, Issue 11, Finance Series 7RA, BEAN
THEORY -FINANCE AS A COMMODITY.
4. Directing the payment of bills.
5. Directing any necessary delay in the payment of certain bills.
6. Handling finances in accordance with "dateline paying" as covered in
an early policy letter.
7. Setting limits on the purchase orders that may be signed.
8. Preventing divisions or departments in Emergency from buying any but
essential promotional supplies or postage.
9. Adjusting payrolls.
10. Setting limits on pay, overtime or bonuses and all authorizations for
pay, overtime or bonuses.
11. Reviewing prices, to ensure all the org's services are priced and
priced properly and where any adjustments are needed, getting
authorization for such from top management. (Prices may not be set
locally in orgs without top management authorization.)
12. Directing any transfers of funds.
13. Deciding upon any large purchases.
14. Authorizing the sale of any equipment or property.
15. Passing upon prices offered for any equipment or property.
Any matter affecting the financial health of the organization has to be
passed upon or planned by the Executive Council and authorized by the FBO.
FINANCIAL PLANNING SCHEDULE
While overall financial planning for the solvency of the org must exist
in mediumrange form, as in Financial Planning Program No. I and in other
longer range programs which align with any strategic planning for the org,
the immediate handling
573
of the org's income and assets is done on a weekly basis.
The weekly financial planning is taken up each Thursday night after the
week's end and is a vital part of the Executive Council meeting for that
week. From the Executive Council the completed FP goes to the FBO for his
final approval.
Thus the three major summaries which have always been required for
standard FP (the Monthly Bills Summary, Monthly Accounts Summary and Income
Note Collections Summary) are still required and made up in monthly format,
but they must also be updated weekly for the weekly FP.
DISBURSEMENT SECTION
The Disbursement Section furnishes the data without which financial
planning is impossible.
A short summary of the data required for financial planning is as
follows:
The Disbursement Section files every bill received in the disbursement
files. It also files every purchase order in these files (once the purchase
has been made). (Ref: HCO PL 2 Mar. 65, PURCHASE ORDER FILING.)
Those bills that are repetitive and purchase orders that are for
materials from companies from whom goods or services are ordered regularly
are filed in folders under the company name. The one-time bills and the one-
time purchase orders are filed in a loose folder for a single month.
The Disbursement Section has made up a mimeographed form. This is the
Monthly Bills Summary.
This form has the name of each company with which the org does business
plus adequate blanks after each alphabet letter for new companies to be
added.
This form has four columns. The first column is the company owed. The
second column is the grand total of money owed that company. The third
column is the amount that is past due. The fourth column is the month since
when the bill has been past due.
All bills are fided on arrival. They are not kept out and entered. They
are filed in the folders. This is important. No one must pay bills just
taken from the post [mail] and saved up. They are promptly filed.
Then one takes the folders one by one and makes up the Monthly Bills
Summary. As each folder is taken up, the bills are examined for
correctness, straightened up and entered in the Monthly Bills Summary.
Purchase orders where the purchase has been made but no statement has yet
come in must also be filed and entered on the Monthly Bills Summary as,
statement or no, this money is owed.
The way the system breaks down is to make up too many folders.
Only a repeating creditor rates a folder. One the org does business with
routinely like the light company, the landlord, the paper company, etc. The
occasional bills and the activated purchase orders for the occasional
creditor go into the occasional bills folder for the month.
Each time a Monthly Bills Summary is made up, the occasional folders for
past months containing unpaid bills and used but not-yet-paid-for purchase
orders are gone through again and added to the statement.
The statement for one month complete, then tells one the total monies
owed by the org for that month. Thus there is a statement for each month,
574
While this is made up and used in a monthly format, it must now be
updated weekly in order to provide an accurate picture for those handling
financial planning.
The Monthly Bills Summary, updated for the week, is due in the hands of
the Executive Council for the weekly Thursday night Executive Council
meeting which includes FP.
BANK RECONCILIATION SECTION
The Bank Reconciliation Section of the Dept of Records, Assets and
Materiel makes up the latest bank records of monies on deposit concurrent
with the Monthly Bills Summary.
This section (concurrent with the Monthly Bills Summary) reconciles all
bank statements, tapes all canceled checks on their counterfoils and in
short makes certain there are no bank errors or omissions.
A Monthly Accounts Summary is then prepared showing the amount in each
bank account. This too is a mimeographed form showing the names of the
banks used, checks outstanding, etc. It also carries a total sum of monies
in the bank.
This form also carries a section devoted to loans outstanding that the
org must pay.
The Monthly Accounts Summary form, once made out, is then updated weekly
and submitted to Executive Council on Thursday night for their financial
planning.
INCOME NOTE COLLECTIONS SUMMARY
THE COLLECTIONS SECTION
The Collections Section of the Department of Income submits to the Ad
Council a form called the Income Note Collections Summary.
This form carries an amount for cash collectible from notes (possible to
collect) and a cash collectible from notes past due and the amount of notes
that are apparently uncollectible. The total is added into grand total of
Credit Advanced.
It gives the total of payments received during the month past (the Ist
to the last day of the month).
It gives the number of statements mailed in the month just past.
It gives the number of persons with overdue notes who have been handed
over to the Director of Clearing and passed on to field staff members.
The Income Note Collections Summary is then updated weekly and, along
with the updated Monthly Bills Summary and Monthly Accounts Summary, is
placed in the hands of Executive Council on Thursday night in time for the
weekly financial planning.
EXECUTIVE COUNCIL ACTION
The first action of the Executive Council is to prepare and get
mimeographed the three forms described herein.
The second action of the Executive Council is to make sure the Treasury
Division is so organized as to be able to make out the forms provided
easily, that their files are so arranged as to do so and that personnel
exists to do them.
The third action of the Executive Council is to make sure the persons
making up the forms know this and other pertinent policy letters.
575
The fourth action of the Executive Council is to make sure that it
receives the proper forms, updated each week and ready for use in financial
planning.
The fifth and continuing action of the Executive Council is to make sure
routinely the forms are accurate and actual and not generalized or "roughly
estimated."
The sixth and most important action each week is to plan financially on
the basis of the three reports and set limits or restraints on POs or
personnel numbers or whatever is necessary to achieve "outgo less than
income" and get or keep the org solvent.
Upon completion of the financial planning, the Executive Council
forwards the FP to the FBO for final approval.
INCOME
The Executive Council's actions of assigning conditions to divisions on
the basis of the gross divisional statistic and actions in straightening up
divisions in Emergency, strengthening Affluences and pushing standard
promotion as per HCO Policy Letter 20 November 1965R, will keep income up.
It is more vital to pressure income up than to save money by financial
planning restrictions. The Emergency Formula places, rightly, economy after
promotion. Promotion comes first.
But economy is also vital. It is handled in relation to income.
When income is far down, the Executive Council simply shuts off all but
promotionally vital POs.
Where a division is in Emergency the Executive Council shuts off all POs
except those vital to promotion in that division. (The tendency of a
division in Emergency is sometimes to demand extravagant or unwise
purchases.)
CHECK SIGNING
The check-signing line contains all three of the above reports as of the
last time they were prepared and a tape of all checks paid since.
Check-signing policy as already released thus requires the other two
monthly reports as well as the other items specified.
To that policy, also add, that a check signer must, to sign a check,
also have before him the last issued orders of the approved financial
planning.
It is very easy to confuse a check-signing line with a financial
planning line.
They are, however, completely different.
One signs any check only after financial planning has been done and
approved and with the total reports of financial planning and decisions
taken, before one.
Check signing is a secondary action and is the result of financial
planning decisions.
One pays only what financial planning has okayed to be paid and how.
DISBURSEMENT ACTION
When financial planning indicates what to pay or not to pay,
Disbursement makes up the checks and sends the lot to check signers.
576
Checks signed during the period are signed as authorized by financial
planning each week, such as "Franking machine, FSM commissions and petty
cash up to
may be paid in the coming week." This, part of the financial
planning minutes of each meeting, is the guide by which weekly checks are
made up, submitted to signers, signed and sent.
SUMMARY
Unless all these actions are done, an org cannot in fact prosper, has
poor credit and is generally upset.
One has to get in the income. That is done by income planning and
demand, and by making divisions do their proper promotions and keep their
statistics up. The mechanism is gross divisional statistics, assignment of
conditions and investigating and putting right, divisions in Emergency and
strengthening the actions that have brought about Affluences by Executive
Council personal inspection. This is the first part of Executive Council
assignment of conditions to divisions. Sometimes, where a divisional
emergency is continued too long, the Executive Council has to order an E-
Meter and case survey of its personnel as an SP is surely about.
In financial planning one safeguards what one gets in as described
above.
Check signers and PO signers are not necessarily Executive Council
members but, whether they are or not, are governed entirely by the last
approved financial planning directive.
The financial planning directive of the week is issued promptly after
the FP is finally approved, as a local Executive Directive, with the week
and financial planning of it in caps, such as: FINANCIAL PLANNING FOR THE
WEEK OF
Financial planning is the second part of the Executive Council
assignment of conditions to divisions.
Long-range planning also appears on this directive. This long-range
financial planning is not binding and is often changed in view of current
happenings. It is a guide by which other executives can tentatively plan.
L. RON HUBBARD
Founder
Rewritten at the request of the BOARD OF DIRECTORS of the CHURCH OF
SCIENTOLOGY INTERNATIONAL
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:ep.ca.rd.pm.iw.gm Copyright 0 1965, 1982 by L. Ron Hubbard ALL
RIGHTS RESERVED
577
HUBBARD COMMUNICATIC
Saint Hill Manor, East Grinst
HCO POLICY LETTER OF 9 JA
Rernimeo
Finance Packs
FBO Hat
D/FBO for MORE Hat
Exec Council
Ad Council
Finance Series 41
VIABILITY
THE MAKE-BREAK POINT OF AN ORG
The CASH/BILLS statistic, when accurately computed, will tell whether an
org or any company is solvent. It tells one where he stands in present time
on a week-toweek basis. But viability is an entirely different concept as
it deals with the future. One may have enough cash to cover his bills at
this moment but will he be able to continue to survive and prosper? That is
where viability comes in.
COST ACCOUNTING
The way one would get an idea of the viability of a company would be by
applying a formula of cost accounting. The formula is THE STOCKS
REPLACEMENT COST PLUS THE RUNNING EXPENSES OF THE COMPANY VERSUS THE GROSS
SALES OF THE COMPANY, AND THAT IS THE COST ACCOUNTING FORMULA.
This is quite simple to see for something like a Pubs Org where you are
dealing with a physical universe commodity. You have books, meters, tapes
and so on and it costs you a certain amount to manufacture these and a
certain amount to run the organization itself to bring about a manufactured
product, to promote, to take orders, deliver and to see that the product
finally winds up in the hands of the consumers.
It is really no different in a public service org except that your
"stocks" are auditing and training services as well as books, meters and so
forth. So one would have to look at those "stocks" in terms of what it
costs the organization to make those services available for public
consumption, including the cost to the organization to procure and train
auditors, Supervisors and so on.
FP PROGRAM NO. 1
The concept of viability directly relates to an org's FP No. 1. A REAL
FP NO. 1 GIVES YOU YOUR MAKE-BREAK POINT IN AN ORG. YOU CAN COMPARE YOUR FP
NO. 1 AGAINST YOUR GI AND CGI AND TELL WHETHER THE ORG IS VIABLE BY
COMPARING THESE FIGURES. I'm talking about a real FP No. 1 that covers
every actual expense under the sun, moon and stars which is required to run
an org and that must include what it will cost to bring about the ability
to deliver training and processing in volume and with high quality. It is
notjust what one "can get by on this week." All too often an org will
actually limit its income and delivery potential by not spending what it
should in order to increase public inflow and delivery. That doesn't mean
that one spends what one makes, as that is the sure road to insolvency; but
it does mean that one must be very wise in financial planning to invest his
beans into things which will result in more beans back; and by doing so
continually, one builds an org bigger and bigger and increases his degree
of viability.
The degree of viability in an organization depends, in the main, on the
degree of intelligent application of proven methods of promotion, sales and
delivery by its executives and staff. In Scientology these proven methods
are contained in HCO PLs, HCOBs, tapes, books and films. One could actually
get a very good idea of the degree
578
an org is running on-policy and in-tech by measuring the relationship
covered in the cost accounting formula. An org that is struggling along,
being dunned by creditors, having few students and pcs in the shop is an
admission by its executives and staff that policy and tech are out in their
org.
UNDELIVERED SERVICE
It is fairly obvious that an organization that received income and
didn't deliver could not survive for long. So when viewing viability, one
must also take into account what delivery backlogs exist.
Having paid-for-but-not-delivered service is actually quite a liability
for an organization as it will now cost the organization more to deliver it
than if it had delivered the service at the time it was paid for. It will
require additional expense to get it delivered in the way of promotional
expenses to call the person in, more auditors or Supervisors to handle the
backlog without disrupting current delivery plus the factor of monetary
inflation related to all funds expended. What it would have cost you to
deliver an intensive of auditing or a book two years ago is not what it
will cost you today. Not only that-someone is also a potential repayment
threat if not delivered to and so anything spent earlier or now to bring
that person in could get no bean return (because the beans were already
collected) and in fact cost the org any future potential income from that
person. Most importantly, we'll never clear the planet just by collecting
advance donations! Delivery is a MUST!
So in viewing the org's viability and in doing an FP No. 1, the org must
also take into account the paid-for-but-not-delivered service and what it
will cost to get it delivered in addition to new procurement and delivery.
SUMMARY
A wise Executive Council in an org should give very careful
consideration to income planning, taking into account existing and
potential delivery capability as well as the handling of backlogged
delivery and then do a real FP No. I that takes into account every single
expense involved in making that income and delivery possible. They would
then program out how to accomplish what is planned and get it DONE, all the
while ensuring that the org never spends more than its CGI plus reserves,
and by wise financial management and adherence to standard policy and tech
get more and more return from the beans expended.
And to the degree that income increases above that FP No. I amount-well,
that's just how viable that org is.
L. RON HUBBARD
Founder
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:iw.gm Copyright C 1983 by L. Ron Hubbard ALL RIGHTS RESERVED
579
HUBBARD COMMUNICATR
Saint Hill Manor, East Grinst
HCO POLICY LETTER OF 4 A
Rernimeo All Exec Secs Exec Council Hats Div Heads Ad Council Hats
FBOs
D/FBOs Finance Series 42
FINANCIAL PLANNING PROGRAM NO. I
R efs:
LRH ED 55 INT FINANCIAL PLANNING PROGRAM
NO. I
LRH ED 79 INT FINANCIAL PLANNING PROGRAM
NO. 1 ADDITION
HCO PL 9 Jan. 83 VIABILITY - THE MAKE-BREAK
POINT OF AN ORG
(This policy letter is reprinted from LRH ED 55 INT, 10 Dec. 69, FINANCIAL
PLANNING PROGRAM NO. I and LRH ED 79 INT, 20 Jan. 70, FINANCIAL PLANNING
PROGRAM NO. I ADDITION with minor additions and revisions to encompass the
current operating scene of an org.)
Carefully planned financial handling will result in an organization
which is not only solvent but expanding on a sound gradient scale. A real
FP No. 1 gives you your make-break point in an org (see HCO PL 9 Jan. 83,
VIABILITY - THE MAKEBREAK POINT OF AN ORG).
To do this an organization has to first of all assess the following:
1. How many basic staff members are required to run and handle the
organization?
2. How much is required for the basic organizational needs to merely
KEEP the
organization there:
a. How much is the rent weekly (or mortgage or reserves loan
repayments)?
b. How much is the telephone weekly?
C. How much is the electricity weekly?
d. How much is the water weekly?
e. How much are rates weekly (property taxes)?
f. How much are costs weekly to cover any other taxes, corporate or
legal matters?
g. How much is needed for natural gas or heating fuel weekly?
h. How much is needed weekly for Estates to maintain the org
buildings and mest?
i. If building is owned, how much is needed weekly for
improvements/upkeep of the building so it retains and increases its
value?
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j. How much are basic admin supplies like pens, paper, file folders,
carbon paper, staples, paper clips, etc., weekly?
3. How much is required for basic promotional actions:
a. How much are envelopes, stationery and stamps for so many Letter
Registrar letters out weekly?
b. How much is required to keep up and mail out advance
registration packets weekly?
C. How much does it cost on a weekly basis to mail a magazine or
broad mailing to your full address list once a month?
d. How much does it cost on a weekly basis to mail out statements
to people who owe the organization money?
e. How much does it cost to mail out information packs to your new
names weekly?
f. How much does it cost to advertise your basic Div 6 services?
g. How much does it cost weekly to cover any awards programs?
4. How much does it cost weekly to keep in your basic communication
lines:
a. How much should your average weekly payment to management be?
b. How much does it cost weekly to pay your 10% or 15% FSM
commission and to service and give your FSMs materials to select
people to your org?
C. How much is your weekly mimeo expense internally and/or to
Pubs/FOLO? This covers remimeoing all issues for staff distribution,
org business forms, mimeo files, newsletters, and payment to
Pubs/FOLO for mimeo sent to your org.
d. How much is the weekly cost of freight, mail and telex to keep
the org in comm with management?
e. How much is your average weekly deposit to your general
liability fund so as to build up a reserve in case of necessary
legal expenses?
f. How much is your average weekly film lease fee?
g. How much is the weekly average cost of LRH lecture tapes for use
in public tape plays?
5. How much is required for basic delivery actions:
a. How much is clay weekly?
b. How much is required to keep tape players operational?
C. How much does it cost weekly to keep up supplies of mimeo forms?
(Auditor Report Forms, routing forms, pink sheets, auditing lists,
etc.?)
d. How much does it cost on a weekly basis for auditor worksheet
paper?
C. How much is needed weekly for course materials? (Reference books
for courses, HCOBs, policy letters, course packs, dictionaries,
translated tapes, etc.?)
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f. How much is the weekly payment for staff training at a higher
org (FLAG, New World Corps, Cont Tech Training Corps or Admin
Training Corps at FOLO, etc.) including any payments for previous
training not yet fully paid off?
6. How much is required to handle the sale of LRH books, meters, tapes,
cassettes,
insignia and other HCO Book Account items~
a. How much is the weekly average cost to restock items which have
been sold?
b. How much is the weekly cost for promotion and marketing of Book
Account items?
C. How much needs to be set aside to purchase new items such as new
books or cassettes?
d. How much is the weekly cost of shipping and packaging to handle
mail order?
(NOTE.. ALTHOUGH THE HCO BOOK ACCOUNT IS INCLUDED HERE, IT IS ADMINISTERED
SEPARATELY AND IS UNDER THE CONTROL OF THE D/FBO FOR M.0.R.E. ITS USE IS
NOT SUBJECT TO REGULAR WEEKLY FP, AND EXPENSES FROM IT MAY NOT BE CUT DUE
TO ANY SITUATION RELATED TO OTHER ORG EXPENSES.)
The list above provides the guidelines for any org in calculating its FP
Program No. 1.
Sea Org Orgs and Units would need to plan additionally for basic staff
welfare expenses such as the amounts needed weekly for crew allowance,
food, medical and dental expense, basic cleaning supplies, basic housing
and berthing supplies, child care. crew uniforms, laundry, transport, etc.
A management org might also have other basic expenses: for example, the
basic amount needed to be set aside weekly for mission (Action Bureau)
expenses, etc.
Any org would review the list provided above for any additional basic
expenses or any not applicable and would then work out its FP No. 1 within
the purpose of the functions of that org. A real FP No. 1 must take into
account every single expense involved in keeping the org there and making
it capable of selling, calling in and delivering to public in volume and
with quality.
HOW TO USE THIS PROGRAM
After carefully figuring out your weekly costs as per above, you now
know exactly how much income you will require weekly in order to exist and
to promote. If you do not make this amount of income weekly, you will know
at once that you are spending more than you are making, at which point
everything must be done to sell more services to your public.
An organization could be in the situation where it has spent more than
it has made; in other words, it has greater bills than it has money with
which to pay them. Now this places an organization into a Danger condition
as regards the society which runs on the basis generally of "pay within 30
days or else."
An organization in this situation, therefore, has got to make more money
than simply its basic weekly costs. Therefore, all excess monies over its
basic weekly costs must be used to pay off its bills, carefully paying such
on a dateline payment basis and as per policy with regard to threatening
creditors.
When an organization is no longer in a Danger condition as regards
society and now has more income than it has in bills, it can gradually use
its excess income to do
582
more promotion, to expand its staff to make more income to do more
promotion and to buy more facilities to increase promotion and so on.
There are many ways an organization can obtain service facilities like
chairs, desks, typewriters, address machines, and mimeo or offset machines
without driving the organization into debt and causing it to have vast
monthly payments which exceed its ability to pay. Inexpensive second-hand
equipment can be obtained while the org sets aside so much money until
outright purchase can be made or it can lease equipment with an option to
buy.
There is definitely a maxim with regard to money and it is THE LESS
AMOUNT OF INCOME AN ORGANIZATION OR AN INDIVIDUAL HAS, THE MORE CAREFULLY
AND WISELY FINANCIAL PLANNING MUST BE DONE.
PROGRAM ADDITION
When FP Program No. 1 was first presented, the initial reports on its
use made it necessary to amplify the program.
The first organization reporting compliance had an average income of
�3,500 per week, yet in doing FP Program No. 1, found that its operating
costs, promotional costs, and monies needed to pay sums due on writs
against the organization amounted to �5,800 per week, whereupon it was
gleefully decided that the organization would have to make more income. Now
this was not the whole intention of Financial Planning Program No. 1.
In presenting Financial Planning Program No. 1, it was considered that
the basic costs of the organization would be LESS than its income, but that
such basic costs would give the Executive Council an idea of how much they
would have to make to barely survive; and every once in a great while, it
would require added effort by the organization to pull its income up to its
bare existence level.
Therefore, the following has been added to this program:
A. After completing the actions listed above, the average weekly income for
the past four months is to be calculated.
B. If the basic expenses of the organization are greater than the average
weekly income, the operational costs must be reduced and the organizational
expenses CUT BACK to a figure below that of the average weekly income.
C. If the organization also has past bills owing, then the organizational
expenses must be CUT BACK even further to permit past bills to be paid. At
least 10% to 15% of the average weekly income must be set aside to pay past-
due bills and so the cutback in expenses must take this figure into
account.
Even if an organization is in the position of having more income than
bills, such basic data as this will help in planning for better expansion.
Therefore, each Executive Council of each organization should meet
weekly to review its basic operational costs in order to really get in this
financial planning program.
In using this Financial Planning Program No. 1, it must be understood
that the weekly allocation for the org is not _fixed against the FP No. 1
amount. The idea of fixed allocations was a complete falsehood found to
have been pushed by a former Deputy Guardian for Finance Worldwide, H.G.
Parkhouse, and was simply an attempt to wipe out FB0s whose job it is to
allocate in relation to the org's production. The amounts worked out for
each category in FP Program No. 1 are the "buoys and landmarks" for use in
"steering" financial planning. Having an FP No. 1 worked out does not then
replace the application of finance policy contained in OEC Vol. 3 and in
the Finance Series and the interrelationship of the application of the
conditions
583
formulas. Another false datum found was that once an FP Program No. 1
amount is worked out that it may not be changed. This is of course
ridiculous as it is expected that orgs will greatly expand and thus will
require more space, more course supplies, more promotion, etc., etc. So it
is necessary to occasionally review and update an org's FP No. 1.
SUMMARY
By correctly working out the costs to run an org in detail, a financial
planning body gains the ability to actually manage and control its
finances. It puts in prediction and tells one how much income must be made
and gives a guideline of the expenses that should be made to buy increased
production and viability for the org. An FP No. 1 is something one uses. It
is not just done for the sake of form or for lack of something better to
do. It is a valuable tool that determines the "course" of your org.
Good luck!
L. RON HUBBARD
Founder
Written at the request of the
Church of Scientology
International
Adopted as official
Church policy by the
CHURCH OF SCIENTOLOGY
INTERNATIONAL
CSI:LRH:dr.gm Copyright 0 1983 by L. Ron Hubbard ALL RIGHTS RESERVED
584