Owens
Mortgage Investment Fund to Amend 2010 Annual Report and Quarterly Reports for
2011
Item
4.02(a)
In the
Annual Report of Owens Mortgage Investment Fund, a California Limited
Partnership (the “Partnership”) on Form 10-K for the fiscal year ended December
31, 2010 (the “Annual Report”), management provided a report that concluded that
our internal control over financial reporting (as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934, as amended) was effective as of
December 31, 2010. On February 6, 2012, management subsequently determined, in
consultation with Crowe Horwath LLP (“Crowe”), the Partnership’s independent
registered public accounting firm, that a material weakness in the Partnership’s
internal control over financial reporting existed as of December 31, 2010, due
to the incorrect reporting of the number of limited partner units outstanding
and the disclosure of the net income or loss allocated to limited partners per
weighted average limited partnership unit during the periods covered by the
Annual Report.
Management
determined that no changes were required to any of the dollar amounts in the
Consolidated Financial Statements presented in the 2010 Form 10-K (only the
number of units outstanding and reporting of income or loss allocated to limited
partners per weighted average limited partnership unit).
On
February 6, 2012, management of the General Partner, after consultation with
Crowe, concurred with management’s conclusion that the Partnership had a
material weakness in the Partnership’s internal control over financial reporting
as of December 31, 2010, and determined that management’s report regarding the
effectiveness of the internal control over financial reporting contained in the
Annual Report should not be relied upon. As a result of this determination, the
Partnership intends to file an amendment to the Annual Report to reflect a
change in management’s assessment of the disclosure controls and procedures as
of December 31, 2010, and to restate Management’s Report on Internal Control
Over Financial Reporting, in addition to restating the number of limited partner
units outstanding and related disclosures.
The
Company also intends to file amendments to the Company’s Quarterly Reports for
the quarters ended March 31, June 30, and September 30, 2011, to reflect changes
in management’s assessment of our disclosure controls and procedures as of each
of those periods and to correct the number of limited partner units outstanding
and related disclosures.
Additionally,
management determined, in consultation with Crowe, that a material weakness in
the Partnership’s internal control over financial reporting existed as of March
31, June 30, and September 30, 2011, due to the incorrect reporting of
noncontrolling interest balances related to a consolidated entity formed during
the first quarter of 2011. The amended Quarterly Reports will reflect
changes in management’s assessment of our disclosure controls and procedures as
of each of those periods in relation to this material weakness and to correct
the balance of noncontrolling interests and net income or loss allocated to
noncontrolling interests.
The
Company notes that during the first quarter of 2012, management commenced the
remediation process of the material weaknesses described above by recalculating
the correct number of limited partner units outstanding and the disclosure of
net income or loss allocated to limited partners per weighted average limited
partnership units in its first quarter of 2012 and to ensure that they are
calculated correctly in the future. Additionally, management recalculated the
correct balance of noncontrolling interests and net income or loss allocated to
noncontrolling interests in its first quarter of 2012 to ensure they are
calculated correctly in the future. Management continues to perform
internal testing to ensure that the controls instituted to remediate the
material weakness are designed and operating effectively.