Communication Requirements explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The communication requirements in R5600.22 to R5600.25 oblige a firm to inform those charged with governance of a public interest entity before providing a non-assurance service to it or to entities above or below it, to obtain their concurrence, and to decline or resign where they disagree.
Why the communication requirements exist
Paragraph 5600.21 A1 states the purpose directly: the communication requirements exist to enable those charged with governance of the public interest entity to have effective oversight of the independence of the firm that assures the sustainability information of that entity.
Paragraph 5600.20 A1 points to 5400.40 A1 and A2 for communication with those charged with governance generally, for all clients. The communication requirements in R5600.22 and the paragraphs that follow it apply only to public interest entities.
The three entities within the communication requirements
Paragraph R5600.22 applies before a firm that undertakes assurance work on the sustainability information of a public interest entity, or a network firm, accepts an engagement to provide a non-assurance service to:
| Limb | Entity |
|---|---|
| (A) | That public interest entity |
| (B) | Any entity that controls, directly or indirectly, that public interest entity |
| (C) | Any entity that is controlled directly or indirectly by that public interest entity |
The communication requirements are not confined to services provided to the assurance client. It covers services to its parent and to its subsidiaries, and the governance body that must be told is that of the public interest entity — not that of the entity actually receiving the service.
That has a real operational consequence in a large group. A network firm accepting an advisory mandate from a subsidiary in another country may trigger the communication requirements towards the audit or assurance committee of the parent, whom it has never dealt with. Firms need a group map and a central clearing process, or the communication requirements are discovered only after acceptance.
What the communication requirements oblige the firm to say
Unless already addressed in a process agreed with those charged with governance, the firm shall:
- (a) inform those charged with governance that the firm has determined the provision of the service (i) is not prohibited; and (ii) will not create a threat to the firm's independence as sustainability assurance provider, or that any identified threat is at an acceptable level or, if not, will be eliminated or reduced to one; and
- (b) provide information to enable them to make an informed assessment about the impact of the service on the firm's independence.
Paragraph 5600.22 A1 gives four examples of that information — the nature and scope of the service; the basis and amount of the proposed fee; the basis for the firm's assessment of any threats and the actions it will take; and whether the combined effect of multiple services creates threats or changes previously identified ones.
Concurrence, and the two escape routes
| Paragraph | Provision |
|---|---|
| R5600.23 | The firm shall not provide the service unless those charged with governance have concurred — under an agreed process or for the specific service — with (a) the firm's conclusion on independence and (b) the provision of that service |
| R5600.24 | Where the firm is prohibited by professional standards, laws or regulations from providing the information, or where providing it would disclose sensitive or confidential information, the firm may still provide the service if it (a) gives such information as it can without breaching its obligations; (b) informs those charged with governance that no threat arises or that any threat will be addressed; and (c) they do not disagree |
| R5600.25 | The firm shall decline the service or end the sustainability assurance engagement if (a) it is not permitted to provide any information — unless addressed in a process agreed in advance; or (b) those charged with governance disagree with the firm's conclusion |
The three requirements form a graded scale and the distinctions matter.
R5600.23 requires positive concurrence — silence is not enough, and the firm must be able to point to agreement on both the conclusion and the service.
R5600.24 lowers that to "do not disagree", but only where the firm is legally or professionally unable to give the full information. That is a narrow gate: commercial sensitivity within the firm is not the same as a legal prohibition or the disclosure of the client's confidential information.
R5600.25 then converts disagreement — or a total inability to communicate — into a mandatory outcome: decline the service or end the assurance engagement. Note the drafting: the firm must have taken into account any matters raised by those charged with governance, and by the entity receiving the service, before it gets there.
Paragraph 5600.21 A2 recommends agreeing a process with those charged with governance in advance, so that the communication requirements are discharged systematically rather than mandate by mandate, and lists what it might cover: the procedure for providing information about a proposed service, on an individual basis or under a general policy; the entities to which the process applies, which might include other public interest entities in the group; services that can be provided without specific approval under an agreed general policy; how authority to approve services is allocated among governance bodies of multiple public interest entities in the same structure; a procedure for cases where information cannot be provided; and how issues not covered are to be resolved.
When a client later becomes a public interest entity
Paragraph R5600.26: a non-assurance service provided currently or previously compromises independence when the client becomes a public interest entity, unless all three:
- (a) the previous service complied with the provisions applying to non-public interest entities;
- (b) services currently in progress that are not permitted for public interest entities are ended before the change or, if that is not possible, as soon as practicable after it; and
- (c) the firm and those charged with governance agree and take further actions to address any threats that are not at an acceptable level.
Paragraph 5600.26 A1 gives examples of actions the firm might recommend — engaging another firm to review or re-perform the affected assurance work, or to evaluate the results of the non-assurance service or re-perform it to the extent necessary for that other firm to take responsibility for it.
The related entity exception, and how it meets the communication requirements
Paragraph R5600.27 runs the other way. As an exception to the prohibitions in Section 5600 and to R5400.20, a firm may assume management responsibilities or provide otherwise-prohibited services to three kinds of related entity of the assurance client:
- (a) an entity with direct or indirect control over the client;
- (b) an entity with a direct financial interest in the client, where it has significant influence and the interest is material to it; or
- (c) an entity under common control with the client,
provided all four conditions are met: (i) the firm does not express an opinion on the sustainability information of that related entity; (ii) it does not assume a management responsibility, directly or indirectly, for the assurance client itself; (iii) the services do not create a self-review threat; and (iv) the firm addresses other threats that are not at an acceptable level.
These two provisions have to be read together and they are easy to confuse. R5600.22 extends the communication requirements up and down the corporate structure of a public interest entity. R5600.27 relaxes the substantive prohibitions for certain related entities — and even permits assuming management responsibilities for them.
The relaxation is tightly fenced. Condition (i) means the firm must not be assuring that entity's own sustainability information; condition (ii) means nothing may amount to taking management responsibility for the assurance client itself, however indirectly; and condition (iii) removes the exception entirely where a self-review threat would arise. In a group with a public interest entity in it, both provisions will usually apply to the same proposed service: the substantive question under R5600.27, and the communication requirements under R5600.22.
Practical checklist for the communication requirements
- Map the corporate structure of every public interest entity assurance client, upwards and downwards.
- Agree a process with those charged with governance covering the six matters in 5600.21 A2.
- Communicate before acceptance, and provide the four items in 5600.22 A1.
- Obtain and record positive concurrence under R5600.23.
- Use R5600.24 only where a legal or professional bar, or client confidentiality, genuinely prevents disclosure.
- Treat disagreement as requiring the firm to decline the service or end the engagement.
- On a client becoming a public interest entity, end impermissible services and agree remedial actions.
- Where relying on R5600.27, satisfy all four conditions and still run the R5600.22 communication requirements.
Common mistakes with the communication requirements
- Communicating only about services to the assurance client and not to its parent or subsidiaries.
- Telling the governance body of the entity receiving the service rather than of the public interest entity.
- Treating silence as concurrence under R5600.23.
- Using R5600.24 for commercially sensitive rather than legally restricted information.
- Continuing a service after those charged with governance have disagreed.
- Relying on R5600.27 where a self-review threat arises.
Key Facts About Communication Requirements
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Which entities does R5600.22 cover?
The public interest entity itself; any entity that controls it directly or indirectly; and any entity controlled directly or indirectly by it.
What must the firm do before accepting?
Unless already addressed in an agreed process, inform those charged with governance that the firm has determined the service is not prohibited and will not create a threat, or that any threat is or will be brought to an acceptable level; and provide information enabling them to make an informed assessment.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Communication Requirements: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.