Machine Learning is a subset of Artificial Intelligence where computer algorithms that learn from your data are applied without you having to explicitly set processing rules. It is for example what Netflix does to recommend a TV show according to what you have liked or what shows you have seen before. In tax matters, we can create and train ML algorithms based on historical classifications of tax-sensitive transactions. For example, identifying Repair and Maintenance (R&M) expenses related to fixed assets that were incorrectly recorded and could not be used as tax deductions.
Identifying and predicting fixes to incorrectly classified entries would normally require tedious manual review of hundreds or perhaps thousands of transactions per month, we can address this and other problems by applying sufficiently trained ML models and using correctly labeled data to increase the level of confidence of the results.
Additionally, a feedback loop is created that continually improves results after the ML results are again validated by the tax team and included as training data for future periods.
1.- Businesses can save in human efforts by avoiding manual record correction.
2.- Businesses can avoid penalties due to errors in the accounting data, and even increase tax savings and deductions with a higher quality data level on the accounts.
3.- A tax administrator will have access to all the data corrections from our data input and output dashboard – Intellectum® and will have the ability to look at the ML output and decide if a transaction that was registered with the wrong tax code or incorrect accounting code, can be reclassified with the value predicted by our system, or if required, with a manually entered value. To further reduce manual efforts, our system can use a weighted confidence percentage built on the model.
In general, our platform can be used to address a myriad of accounting and tax classification problems, such as exempted / non-exempted capital acquisitions, accrued derived / non-derivative income, accrued expenses incurred / not incurred, deductible / non-deductible entertainment, legal or capital consulting expenses / non-equity, and deductible items in capitalized accounts.
We invite you to use our platform and experience the advantage of our services using your data and let our system realize and share any corrections needed. You can use our existing models with your data to solve your particular case, or you can engage us to create tailored models for your problems throughout the organization.