Andrew & Associates Audit firm, has been approached to conduct the audit of Ninja Games Ltd (NGL), a manufacturer of computer games, for the year ended 31 December 2019. Andrew & Associates has not previously audited NGL's financial report, although it has undertaken other types of engagements for NGL. Last year NGL hired Andrew & Associates to assist in the redesign of NGL's accounting software to ensure that internal controls over the online sales were adequate to ensure the confidentiality of customer data and accuracy of recording. The new software was implemented at the beginning of the current year and appears to be working satisfactorily. As part of this year's audit, Andrew and Associates is expected to review the internal controls at NGL, including the controls within the IT systems. As part of NGL's financing arrangements with its bank, ABC Bank Ltd, it has a loan covenant that stipulates that the quick asset ratio cannot be less than 1:1 or ABC Bank Ltd has the right to withdraw all funding. The board has advised Andrew and Associates that NGL's quick asset ratio is currently at 0.8:1 due to industrial action holding up the sale of goods imported from overseas. The board has asked Andrew and Associates to ignore this temporary breach of the loan covenant, explaining that NGL is a stable and financially sound company, and that the ratio will return to a positive level on resolution of the industrial dispute. The board has indicated that unnecessarily disclosing this within the audit report would force it to reconsider its plans to use Andrew and Associates audit firm for other engagements. As a result of NGL's current cash flow difficulties, the board has requested that Andrew & Associate's audit fee for 2019 be paid in NGL shares. The board has indicated that the market value of the shares will equate to the value of the audit fee charged by Andrew & Associates.