IdealProtect Limited (IdealProtect) has been an audit client of Celestia & Associates (C&A) for the past 15 years. IdealProtect is based in Toowoomba, where it manufactures high-tech armour-plated personnel carriers. IdealProtect often has to go through a competitive market tender process to win large government contracts. Its main product, the small but powerful Territory Grappler, is highly specialised and IdealProtect does business only with nations that have a recognised, democratically elected government. Ideal Protect maintains a highly secure environment because of the sensitive and confidential nature of its vehicle designs and its clients. 

Myah Roberts has been the engagement partner on the Ideal Protect audit for the last five years. Myah is a specialist in auditing clients in the defence industry and intends to remain as review partner when the audit is rotated next year to a new partner (Theo Luna, who is to be promoted to partner to enable him to sign-off on the audit). 

The board of IdealProtect is considering issuing half-yearly financial reports in addition to its full-year financial reports and has approached the audit partner, Myah Roberts, to discuss the possibility of engaging the firm to discuss the audit implications. Myah suggests that C&A could review the half-yearly financial reports. IdealProtect’s end of financial year is 30 June.

Required

Discuss the expectations gap that could exist for the audit of IdealProtect. Consider the existence of any special interests of the users of IdealProtect’s financial reports.