When a message is flagged for moderator attention, it gets highlighted in the top menu which is awesome. I have seen cases though where the post in particular was deleted by the original poster, but the alert still stays? Should it not be the case that the highlight/alert only shows for active posts?
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As noted (comments), we've changed our outlook here; if a post is deleted (via any mechanism) the moderator flags are dismissed - there isn't generally anything left to do. If a deleted post is later flagged, however, that is preserved.
This only applies to moderator flags (spam/offensive flags evaporate with deletion). This serves uses: since moderator flags are typically things beyond the norm, it is not reliable to assume that they no longer apply just because the post is deleted.
When the new moderator dashboard ships, this should be improved:
I think that there is a lot of utility in keeping flags on deleted posts. Primarily for tracking purposes. That said, people are also allowed to flag deleted posts directly. It rarely happens but isn't something I think is necessary to prune.
Flags on deleted content are primarily useful for trend analysis. Namely, you can spot if a particular post earned a lot of flags, or you might recognize that a certain user has been flagged for the umpteenth time. The presence of moderator flags can sometimes help identify what may have been particularly egregious cases of content amidst a sea of things that were deleted for smaller reasons.
Basically, it does what the flag is supposed to do: place the post on your radar to note that something was reported. It sometimes indicates that action needs to be done by the moderator, but sometimes it serves the purpose of just bringing attention to the event. And for that, I find it is useful to keep flags on posts that were deleted. It's a lot faster to see it through that console (complete with flag comments on what the problem was) than to sift the "recently deleted" list when I first log in every morning.