diff --git a/.golangci.yml b/.golangci.yml
index ee80ea33..b4b9d3b6 100644
--- a/.golangci.yml
+++ b/.golangci.yml
@@ -230,7 +230,7 @@ linters-settings:
           - ["call-chain", "loop", "method-call", "recover", "immediate-recover", "return"]
       - name: dot-imports
         arguments:
-          - { allowedPackages: ["github.com/onsi/ginkgo/v2","github.com/onsi/gomega"] }
+          - { allowedPackages: ["github.com/onsi/ginkgo/v2","github.com/onsi/gomega","sigs.k8s.io/controller-runtime/pkg/envtest/komega"] }
       - name: duplicated-imports
       - name: early-return
       - name: empty-block
diff --git a/internal/controller/managedcluster_controller_test.go b/internal/controller/managedcluster_controller_test.go
index f252e2e7..b423aa9e 100644
--- a/internal/controller/managedcluster_controller_test.go
+++ b/internal/controller/managedcluster_controller_test.go
@@ -19,6 +19,7 @@ import (
 	"time"
 
 	hcv2 "github.com/fluxcd/helm-controller/api/v2"
+	sourcev1 "github.com/fluxcd/source-controller/api/v1"
 	. "github.com/onsi/ginkgo/v2"
 	. "github.com/onsi/gomega"
 	corev1 "k8s.io/api/core/v1"
@@ -28,6 +29,7 @@ import (
 	"k8s.io/apimachinery/pkg/types"
 	"k8s.io/client-go/rest"
 	"sigs.k8s.io/controller-runtime/pkg/client"
+	. "sigs.k8s.io/controller-runtime/pkg/envtest/komega"
 	"sigs.k8s.io/controller-runtime/pkg/reconcile"
 
 	hmc "github.com/Mirantis/hmc/api/v1alpha1"
@@ -42,6 +44,8 @@ var _ = Describe("ManagedCluster Controller", func() {
 			templateName    = "test-template"
 			svcTemplateName = "test-svc-template"
 			credentialName  = "test-credential"
+
+			helmChartURL = "http://source-controller.hmc-system.svc.cluster.local/helmchart/hmc-system/test-chart/0.1.0.tar.gz"
 		)
 
 		ctx := context.Background()
@@ -123,6 +127,11 @@ var _ = Describe("ManagedCluster Controller", func() {
 				Expect(k8sClient.Create(ctx, svcTemplate)).To(Succeed())
 				svcTemplate.Status = hmc.ServiceTemplateStatus{
 					TemplateStatusCommon: hmc.TemplateStatusCommon{
+						ChartRef: &hcv2.CrossNamespaceSourceReference{
+							Kind:      "HelmChart",
+							Name:      "ref-test",
+							Namespace: "default",
+						},
 						TemplateValidationStatus: hmc.TemplateValidationStatus{
 							Valid: true,
 						},
@@ -212,17 +221,102 @@ var _ = Describe("ManagedCluster Controller", func() {
 			Expect(k8sClient.Delete(ctx, management)).To(Succeed())
 			Expect(k8sClient.Delete(ctx, namespace)).To(Succeed())
 		})
+
 		It("should successfully reconcile the resource", func() {
 			By("Reconciling the created resource")
 			controllerReconciler := &ManagedClusterReconciler{
-				Client: k8sClient,
+				Client: mgrClient,
 				Config: &rest.Config{},
 			}
 
+			By("Ensure finalizer is added")
 			_, err := controllerReconciler.Reconcile(ctx, reconcile.Request{
 				NamespacedName: typeNamespacedName,
 			})
 			Expect(err).NotTo(HaveOccurred())
+			Eventually(Object(managedCluster)).Should(SatisfyAll(
+				HaveField("Finalizers", ContainElement(hmc.ManagedClusterFinalizer)),
+			))
+
+			By("Reconciling resource with finalizer")
+			_, err = controllerReconciler.Reconcile(ctx, reconcile.Request{
+				NamespacedName: typeNamespacedName,
+			})
+			Expect(err).To(HaveOccurred())
+			Eventually(Object(managedCluster)).Should(SatisfyAll(
+				HaveField("Status.Conditions", ContainElement(SatisfyAll(
+					HaveField("Type", hmc.TemplateReadyCondition),
+					HaveField("Status", metav1.ConditionTrue),
+					HaveField("Reason", hmc.SucceededReason),
+					HaveField("Message", "Template is valid"),
+				))),
+			))
+
+			By("Creating absent required resources: HelmChart, HelmRepository")
+			helmRepo := &sourcev1.HelmRepository{
+				ObjectMeta: metav1.ObjectMeta{
+					Name:      "test-repository",
+					Namespace: "default",
+				},
+				Spec: sourcev1.HelmRepositorySpec{
+					Insecure: true,
+					Interval: metav1.Duration{
+						Duration: 10 * time.Minute,
+					},
+					Provider: "generic",
+					Type:     "oci",
+					URL:      "oci://hmc-local-registry:5000/charts",
+				},
+			}
+			Expect(k8sClient.Create(ctx, helmRepo)).To(Succeed())
+
+			helmChart := &sourcev1.HelmChart{
+				ObjectMeta: metav1.ObjectMeta{
+					Name:      "ref-test",
+					Namespace: "default",
+				},
+				Spec: sourcev1.HelmChartSpec{
+					Chart: "test",
+					Interval: metav1.Duration{
+						Duration: 10 * time.Minute,
+					},
+					ReconcileStrategy: sourcev1.ReconcileStrategyChartVersion,
+					SourceRef: sourcev1.LocalHelmChartSourceReference{
+						Kind: "HelmRepository",
+						Name: helmRepo.Name,
+					},
+					Version: "0.1.0",
+				},
+			}
+			Expect(k8sClient.Create(ctx, helmChart)).To(Succeed())
+
+			_, err = controllerReconciler.Reconcile(ctx, reconcile.Request{
+				NamespacedName: typeNamespacedName,
+			})
+			Expect(err).To(HaveOccurred())
+
+			By("Patching ClusterTemplate status")
+			Expect(k8sClient.Get(ctx, client.ObjectKeyFromObject(template), template)).Should(Succeed())
+			template.Status.ChartRef = &hcv2.CrossNamespaceSourceReference{
+				Kind:      "HelmChart",
+				Name:      "ref-test",
+				Namespace: "default",
+			}
+			Expect(k8sClient.Status().Update(ctx, template)).To(Succeed())
+
+			helmChart.Status.URL = helmChartURL
+			helmChart.Status.Artifact = &sourcev1.Artifact{
+				URL:            helmChartURL,
+				LastUpdateTime: metav1.Now(),
+			}
+			Expect(k8sClient.Status().Update(ctx, helmChart)).To(Succeed())
+
+			// todo: next error occurs due to dependency on helm library. The best way to mitigate this is to
+			//  inject an interface into the reconciler struct that can be mocked out for testing.
+			_, err = controllerReconciler.Reconcile(ctx, reconcile.Request{
+				NamespacedName: typeNamespacedName,
+			})
+			Expect(err).To(HaveOccurred())
 		})
 	})
 })
diff --git a/internal/controller/suite_test.go b/internal/controller/suite_test.go
index 18e71f83..a65cbcb9 100644
--- a/internal/controller/suite_test.go
+++ b/internal/controller/suite_test.go
@@ -40,6 +40,7 @@ import (
 	ctrl "sigs.k8s.io/controller-runtime"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 	"sigs.k8s.io/controller-runtime/pkg/envtest"
+	. "sigs.k8s.io/controller-runtime/pkg/envtest/komega"
 	logf "sigs.k8s.io/controller-runtime/pkg/log"
 	"sigs.k8s.io/controller-runtime/pkg/log/zap"
 	metricsserver "sigs.k8s.io/controller-runtime/pkg/metrics/server"
@@ -147,6 +148,7 @@ var _ = BeforeSuite(func() {
 	Expect(err).NotTo(HaveOccurred())
 	mgrClient = mgr.GetClient()
 	Expect(mgrClient).NotTo(BeNil())
+	SetClient(mgrClient)
 
 	err = hmcmirantiscomv1alpha1.SetupIndexers(ctx, mgr)
 	Expect(err).NotTo(HaveOccurred())