Ernst & Young quits Friedman’s

Ernst & Young LLP has resigned as Friedman’s Inc. independent public account.

According to a filing with the Securities and Exchange Commission Monday morning, Ernst & Young told Savannah-based Friedman’s on Jan. 24 that one reason it decided to end the relationship was the company’s recent filing for Chapter 11.

The Chapter 11 filing was prompted by limitations imposed on funding by the company’s lenders following the lenders’ decision not to agree to amended financial covenants in the company’s credit facility. As a result of the funding limitations, the company was unable to satisfy all of its cash requirements in the ordinary course of business. Friedman’s is also under federal investigation for alleged fraud.

Friedman’s said it will begin a search for a new independent registered public accounting firm, but has not yet engaged any firm.

Friedman’s also said that during its previous two fiscal years and from Oct. 3, 2004 through Jan. 24, 2005, “there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.” In addition, during the same period Friedman’s said that there were no “reportable events.”