<TKC National Association's Basic Policy on AI Utilization> Basic Policy on AI Utilization and Necessary Actions for Accounting Firms

The TKC National Association (Chairman: Koji Sakamoto, Certified Public Tax Accountant; Office: Shinjuku-ku, Tokyo; Membership: 11,600), an organization of certified public tax accountants and certified public accountants, has established a "Basic Policy" and "Mandatory Clauses for Advisory Contracts" regarding the use of AI services for TKC member firms. In recent years, services utilizing AI technology (hereafter, AI services), such as generative AI services and business systems equipped with AI functions, have rapidly proliferated, creating an environment where anyone can easily perform advanced information processing and creative activities. Development of various functions utilizing AI services is also progressing within the TKC system (such as financial accounting systems), and the use of AI in accounting firms is expected to expand rapidly. On the other hand, the use of AI services requires compliance with the provisions of the "Certified Public Tax Accountant Act" and the "Personal Information Protection Act." In light of this, the TKC National Association has newly established a "Basic Policy" on the utilization of AI and has added items related to the use of AI services to the "Mandatory Clauses for Advisory Contracts" for TKC members. The details are as follows. 1. Basic Concept AI services will be actively utilized to improve operational efficiency and quality, with legal compliance as the top priority. 2. Important Operational Principles (1) Use only after obtaining the client's consent. (2) Always verify the accuracy of output results, with the final judgment made by the certified public tax accountant. (3) Make the status of AI usage "visible." - Mandatory Clauses for Advisory Contracts - When using AI services in business operations, the following actions must be taken: (1) Obtain "Consent" (Article 27, Paragraph 1 of the Personal Information Protection Act) [Principle] Obtain a consent form in advance when inputting client information into an AI service. (2) Provide "Notification" (Article 27, Paragraph 2 of the Personal Information Protection Act) For clients from whom obtaining a consent form is difficult, provide notification using a notice document that describes the purpose of using the AI service. (3) Revise the Privacy Policy Add the use of AI services to the "Privacy Policy." (4) Revise the Advisory Contract Add items related to the use of AI services to the "Mandatory Clauses for Advisory Contracts for TKC Members." ■ Background for Establishing the "Basic Policy" on AI Utilization Unlike general companies, when accounting firms utilize AI services, it is assumed that the data input into the AI will mostly be client company data. In such cases, it is necessary to comply with the following two laws: the Certified Public Tax Accountant Act and the Personal Information Protection Act. 1. Certified Public Tax Accountant Act (1) Article 38 and Article 54 of the Certified Public Tax Accountant Act If a certified public tax accountant or their staff inputs confidential information (including personal information) obtained in the course of business into an AI service, there is a risk of violating the duty of confidentiality under the Certified Public Tax Accountant Act. (2) Article 41-2 of the Certified Public Tax Accountant Act If the management of staff in a tax accountant office is inadequate, there is a possibility of violating the duty of confidentiality under this article. 2. Personal Information Protection Act (1) Article 27 of the Personal Information Protection Act The act of a certified public tax accountant inputting information entrusted by a client company into an AI may constitute a "provision to a third party" of personal information. (2) Article 28 of the Personal Information Protection Act If a certified public tax accountant uses an overseas AI service, there is a risk of violating regulations on the cross-border transfer of personal information. Based on the above risks, the TKC National Association has newly established a "Basic Policy" on the utilization of AI. ● About the TKC National Association The TKC National Association (https://www.tkc.jp/tkcnf/about/) is one of Japan's largest professional accounting groups, organized by 11,600 certified public tax accountants and certified public accountants, dedicated to realizing tax justice and the perpetual prosperity of client companies.