Substantive Tests for Accounts Receivable:

1. Confirmation of Accounts Receivable:

   • The audit team should send confirmation requests directly to customers to confirm the amounts owed to Rashida LTD.
   • Select a sample of customer accounts from the accounts receivable ledger and send positive confirmation requests (where customers must respond whether they agree or disagree with the stated amount).
   • Follow up on any non-responses or discrepancies to resolve differences.

2. Subsequent Cash Receipts Testing:

   • Review cash receipts after the year-end to determine whether outstanding receivables at the balance sheet date have been collected.
   • Examine bank statements and cash receipt records for January and February 2024 to verify payments received from customers.
   • Match these receipts to outstanding accounts receivable as of December 31, 2023, to confirm accuracy.

3. Aging Analysis of Accounts Receivable:

   • Obtain the accounts receivable aging report as of December 31, 2023, and analyze the age of receivables.
   • Identify significantly overdue balances (e.g., more than 90 days past due).
   • Inquire with management about the collectability of these balances and assess whether an allowance for doubtful debts is required.

4. Cut-Off Testing:

   • Verify transactions around the year-end to ensure correct period recognition of revenue and receivables.
   • Select a sample of sales transactions from before and after December 31, 2023.
   • Check shipping documents, invoices, and sales records to confirm that sales made before the year-end are included in the accounts receivable balance and that sales made after the year-end are excluded.