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Organization: NAICS classification codes #8

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saumier opened this issue Oct 13, 2020 · 1 comment
Open

Organization: NAICS classification codes #8

saumier opened this issue Oct 13, 2020 · 1 comment

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@saumier
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saumier commented Oct 13, 2020

Feedback from Frederic Julien:
"There is no easy way to verify the NAICS classification of an entity, unless you can access that entity's tax return or payroll account documentation. NAICS can be presumed (or automatically infered) with a fair degree of accuracy in 90% of cases if you know the nature of their activities. It gets trickier for organizations that are part of larger legal entity (for example, a municipality) as that larger entity may or not choose to divide its accounting framework in different NAICS "establishments". So we have two options.

  1. Define a typology according to common industry terms and map it to NAICS codes, accepting the inferred code may in 5-10% of cases differ from the real code; or,
  2. Use the actual NAICS labels (which are not colloquial or intuitive) and accept a fairly high risk of errors, except for those who do bother to verify their NAICS code.
    Pros of option 1: This may provide a more granular degree of information which may serve other use cases.
    Con of option 1: We will never be able to know for sure which NAICS code applies to each organization.
    Pros of option 2: It raises awareness of the NAICS classification, which may lead people to actually verify their code and revise it if necessary. It could also provide a high degree of certainty if we asked users to certify that the code was verified with a point in time qualifier.
    Cons of option 2: It won't work as well for non-performing/presenting organizations (i.e. associations) because their NAICS labels are more obscure. And NAICS codes are useful only in North America: we can map them to ISIC codes, but the inferred ISIC codes may not always be accurate.
    If we had a online form, I would go with option 1, then I would infer NAICS and I would ask the user to validate the NAICS code. But that's not possible within a spreasheet."
@saumier
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saumier commented Oct 13, 2020

Also, one organization may have several NAICS codes.

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