The thing that frustrated me the most with Poseidon was the lack of accountability to which I believe the external auditors were held.
I relied on the audit opinion provided, and the belief that proper standard audit procedures were performed as part of making my investment decision making process. It is standard procedure to send out audit confirmation letters directly to customers for large accounts receivable balances outstanding at year end, with additional emphasis on this area when the balances are growing disproportionately.
In plain English, this means the auditor sends out letters to Poseidon's customers asking them to confirm in writing whether they agree with the amount/balance Poseidon says is owed to them. It doesn't seem plausible that the auditor actually performed the required procedures given the circumstances. Additionally, if any discrepancies arise in those confirmations, you must increase the sample size of your audit confirmations until you reach a point where you able to conclude with statistical accuracy that no material error exists.
Despite this apparent omission, the auditors were not held accountable for their actions. Given the apparent situation, I'm bewildered at the fact that the auditors were not held accountable for 80%+ of losses, nor were they fined for their failure to properly discharge their responsibilities.
This should have been a slam sunk case......so why were investors left swinging in the wind? Perhaps I'm missing something?
Roland the bewildered :(